A monopoly will be maximising total welfare if:
A)price equals marginal revenue
B)price equals marginal profit
C)price equals marginal cost
D)the marginal cost curve intersects the marginal revenue curve

Question

Quizplus · Accepted Answer

A monopoly will maximise total welfare when it produces where marginal cost equals marginal revenue. This is because at this point, the socially optimal level of output is produced where the marginal benefit to society equals the marginal cost of production. Therefore, the monopoly should set its price equal to marginal cost to maximise total welfare.

A Monopoly Will Be Maximising Total Welfare If