For a monopoly firm, the shape and position of the demand curve play a role in determining the (i)
Profit-maximizing price.(ii)
Shape and position of the marginal-cost curve.(iii)
Shape and position of the marginal-revenue curve.
A)(i) and (ii) only
B)(ii) and (iii) only
C)(i) and (iii) only
D)(i), (ii), and (iii)

Question

Quizplus · Accepted Answer

The profit-maximizing price is determined by the intersection of the marginal-revenue and marginal-cost curves. The shape and position of the marginal-revenue curve are determined by the shape and position of the demand curve, while the shape and position of the marginal-cost curve are determined by the costs of production. Therefore, both (i) and (iii) are influenced by the shape and position of the demand curve, but (ii) is not. Thus, the correct choice is (i) and (iii) only, which is option C.

For a Monopoly Firm, the Shape and Position of the Demand