The monopolist and the perfectly competitive firm both maximize profits by choosing to produce at the level of output where:
A)marginal cost equals marginal revenue, and price is equal to minimum average total cost.
B)marginal cost intersects demand, and the price is determined by this intersection.
C)marginal cost equals marginal revenue, and price is equal to average revenue.
D)marginal cost equals average revenue, and price is equal to minimum average total cost.

Question

Quizplus · Accepted Answer

Both monopolists and perfectly competitive firms maximize profits where marginal cost equals marginal revenue. In perfect competition, price equals average revenue.

The Monopolist and the Perfectly Competitive Firm Both Maximize Profits