A monopolist is a price
A)setter and will select an output where marginal revenue equals marginal cost but charges a price the market will bear.
B)setter and will select an output where marginal revenue equals demand and charges a price equal to this point.
C)taker and will select an output where demand equals supply and take the market price.
D)taker and will select an output dictated by the deadweight loss.

Question

Quizplus · Accepted Answer

A monopolist has the power to set prices and will select an output where marginal revenue equals marginal cost in order to maximize profits. However, they will charge a price that the market is willing to pay, which may be higher than the marginal cost-based price. Therefore, the correct option is A, where the monopolist selects output based on marginal revenue and marginal cost, but sets a price that maximizes profits.

A Monopolist Is a Price