For a monopolist:
A) price equals average total cost.
B) price is above marginal revenue.
C) marginal revenue equals zero.
D) marginal cost equals zero.
E) average total cost equals marginal cost.

Question

Quizplus · Accepted Answer

A monopolist sets its price above the marginal revenue to maximize profits. If the price is equal to the average total cost (ATC), the firm is breaking even and not making any profit. If marginal revenue equals zero, the monopolist is producing at the profit-maximizing level where marginal revenue equals marginal cost, and setting a price above this level. If marginal cost equals zero or average total cost equals marginal cost, the monopolist would produce where price equals marginal cost, which is inefficient and not profit-maximizing.

For a Monopolist