Once a monopoly has determined how much it produces, it will charge a price that
A) is determined by its demand curve.
B) is equal to its average total cost.
C) is independent of the amount produced.
D) is determined by the intersection of the marginal cost and average total cost curves.
E) minimises marginal cost.

Question

Quizplus · Accepted Answer

A monopoly will charge a price that is determined by its demand curve. This is because a monopolist has market power and can control the price to some extent. The demand curve shows the relationship between the price of a good and the quantity demanded by consumers. By choosing a price that maximizes its profits, the monopoly will be able to charge a price that reflects the demand for its product.

Once a Monopoly Has Determined How Much It Produces, It