For a monopoly, MC = MR

Name: For a monopoly, MC = MR < P so that MC < MU.
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Question

For a monopoly, MC = MR < P so that MC < MU.

Quizplus · Accepted Answer

A monopoly maximizes profits by producing at the point where marginal revenue (MR) equals marginal cost (MC). Since the monopoly has market power and faces a downward sloping demand curve, the price (P) will be greater than both MC and MR. Therefore, for a monopoly, MC = MR < P, meaning that the marginal cost is less than the price and the marginal utility (MU) is also less than the price.

For a Monopoly, MC = MR < P So That