At what level of output would a profit-maximizing monopolist choose to produce at?
A) where total cost is minimized
B) where total revenue is maximized
C) where marginal revenue equals marginal cost
D) where average total cost is minimized

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will choose to produce at the level where marginal revenue (MR) equals marginal cost (MC) because that is the point where the firm will earn the highest profit. If the monopoly produces at a lower output, then MR will be greater than MC and the firm can increase profits by producing more. If the monopoly produces at a higher output, then MC will be greater than MR and the firm can increase profits by reducing output. Therefore, the profit maximizing output is where MC equals MR.

At What Level of Output Would a Profit-Maximizing Monopolist Choose