Which of the following is true?
A)A monopoly firm is a price-taker.
B)MR P if the demand curve is downward sloping.
C)MR = MC is a profit-maximizing rule for any firm.
D)In monopoly P = MC when profits are maximized.

Question

Which of the following is true?
A)A monopoly firm is a price-taker.
B)MR > P if the demand curve is downward sloping.
C)MR = MC is a profit-maximizing rule for any firm.
D)In monopoly P = MC when profits are maximized.

Quizplus · Accepted Answer

In a monopoly market, the firm has market power and can influence the price it charges. Therefore, it is not a price-taker (A is incorrect). MR > P if the demand curve is downward sloping (B is incorrect). The profit-maximizing rule for any firm is to produce at the point where MR = MC, because any additional unit of output would incur a cost that is greater than the revenue it generates (C is correct). In a monopoly, P > MC when profits are maximized (D is incorrect).

Which of the Following Is True