A monopolist will continue to increase production until the marginal cost of the variable factor is

Question

Quizplus · Accepted Answer

A monopolist will maximize profits by producing up to the level where marginal cost (MC) is equal to marginal revenue (MR). However, when determining the optimal level of the variable factor, the monopolist should produce up to the point where the marginal revenue product (MRP) of the factor is equal to its marginal cost (MCv). So, the monopolist will continue to increase production until the marginal cost of the variable factor is equal to the marginal revenue product of the factor (i.e., MCv = MRP). Therefore, the best choice is B.

A Monopolist Will Continue to Increase Production Until the Marginal