What is the profit maximization condition for a monopolist?
A) MR MC
B) MR = MC
C) AR = MC
D) AR = D

Question

What is the profit maximization condition for a monopolist?
A) MR > MC
B) MR = MC
C) AR = MC
D) AR = D

Quizplus · Accepted Answer

The profit maximization condition for a monopolist is to produce at the quantity where marginal revenue (MR) equals marginal cost (MC). In other words, MR = MC. This is because at any point where MR is greater than MC, the firm can increase profit by producing more, and at any point where MC is greater than MR, the firm can increase profit by producing less. Therefore, the optimal level of output for a monopolist occurs where the additional revenue gained from producing one more unit (MR) is just equal to the additional cost (MC) of producing that unit.

What Is the Profit Maximization Condition for a Monopolist