The profit- maximizing monopolist that faces a horizontal TC curve will:
A)produce that level of output at which MR is equal to zero.
B)shut down and move to his best alternative employment.
C)charge a price equal to MC and satisfy all market demand.
D)produce at the level of output where demand equals supply.

Question

Quizplus · Accepted Answer

The profit-maximizing monopolist that faces a horizontal TC curve will produce that level of output at which MR is equal to zero. This is because the monopolist will want to produce the output level where the marginal revenue from selling an additional unit of output is equal to the marginal cost of producing that unit.

The Profit- Maximizing Monopolist That Faces a Horizontal TC Curve