A monopolist maximizes profit by producing the quantity at which
A) marginal cost equals price.
B) marginal revenue equals price.
C) marginal revenue equals marginal cost.
D) marginal cost equals demand.
E) marginal cost is minimized.

Question

Quizplus · Accepted Answer

A monopolist will maximize their profit by producing the quantity at which their marginal revenue equals their marginal cost. This is because at this level of production, the additional revenue gained from producing one more unit (marginal revenue) will exactly equal the additional cost incurred from producing one more unit (marginal cost). Producing any more or less than this quantity would result in a decrease in profit for the monopolist.

A Monopolist Maximizes Profit by Producing the Quantity at Which