A monopoly firm selling textbooks to students in a small town is currently maximizing profits by charging a price of $50 per book. It follows that the marginal cost of textbooks is:
A) equal to $50.
B) less than $50.
C) greater than $50.
D) greater than the average total cost.

Question

Quizplus · Accepted Answer

In a monopoly, the firm maximizes profit where marginal cost (MC) equals marginal revenue (MR), not price. Since the firm is maximizing profits, the price ($50) is greater than the MC.

A Monopoly Firm Selling Textbooks to Students in a Small