When a monopolist is producing at the profit-maximizing output level, the value to consumers of one additional unit of output will
A) exceed the monopolist's marginal cost.
B) equal the monopolist's marginal cost.
C) be less than the monopolist's marginal cost.
D) exceed the price of the additional unit.

Question

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing output level is where marginal cost equals marginal revenue, not price. The price is higher than marginal cost, so the value to consumers (price) exceeds the marginal cost.

When a Monopolist Is Producing at the Profit-Maximizing Output Level