A profit-maximizing monopolist sets
A)his or her price where MC = MR.
B)his or her output where MC = MR.
C)his or her price where MR MC.
D)his or her output where P = MC.

Question

A profit-maximizing monopolist sets
A)his or her price where MC = MR.
B)his or her output where MC = MR.
C)his or her price where MR > MC.
D)his or her output where P = MC.

Quizplus · Accepted Answer

A profit-maximizing monopolist determines the quantity of output to produce where marginal cost (MC) equals marginal revenue (MR). This is the profit-maximizing condition for firms in all types of markets, including monopolies. The monopolist then sets the price based on the demand curve at that quantity of output.

A Profit-Maximizing Monopolist Sets