An unregulated monopoly is likely to have its marginal cost set:
A)above its marginal revenue
B)equal to its average total cost
C)below its average fixed cost
D)below the market price of its goods

Question

Quizplus · Accepted Answer

An unregulated monopoly has the power to set its own prices as there is no competition. Therefore, to maximize profits, it will set a price that is above its marginal cost. However, since there is no competition, the market price of its goods will also be set at this price. As a result, the monopoly's marginal cost will be below the market price of its goods.

An Unregulated Monopoly Is Likely to Have Its Marginal Cost