- Refer to Figure 24.3.Suppose this good could somehow be produced at no cost (that is,the total cost at any level of output was zero).This single-price monopoly firm would maximize profit by A)Raising the price as high as possible until the quantity demanded began to decrease. B)Producing an infinite amount and selling at the highest price possible. C)Producing Q₂ and charging P₂.

Question

Quizplus · Accepted Answer

In a monopoly, profit maximization occurs where marginal revenue equals marginal cost. If production costs are zero, the firm maximizes profit by producing where marginal revenue equals zero, which corresponds to Q2 and charging P2.