What quantity will a monopolist operate at?
A) where MR = MC, charging a price equal to average variable cost
B) where MR = MC, charging a price equal to marginal revenue
C) where MR = MC, charging price corresponding to average total cost at that level
D) where MR = MC, charging a price corresponding to demand at that level

Question

Quizplus · Accepted Answer

A monopolist determines its output level where marginal revenue (MR) equals marginal cost (MC) and then charges a price based on the demand curve at that quantity. This means the price is typically above MC, reflecting the monopolist's market power and ability to set prices above marginal costs.

What Quantity Will a Monopolist Operate At