If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:
A) adjusts the price of the product until demand becomes perfectly inelastic.
B) will set the price of the product equal to the marginal cost of production.
C) will set the price of the product equal to the average total cost of production.
D) will set the price of the product so that its marginal revenue equals its marginal cost.

Question

Quizplus · Accepted Answer

A monopolist maximizes profits by setting the price where marginal revenue equals marginal cost, as this is the point where the additional cost of producing one more unit equals the additional revenue gained from selling it.

If a Firm Has a Monopoly Over the Sale of Camera