A profit-maximizing monopolist
A)engages in more research and development activity than a perfectly competitive firm.
B)produces the output level where P = MC.
C)produces less output than a perfectly competitive industry.
D)produces at the unit elastic point on the market demand curve.

Question

Quizplus · Accepted Answer

A monopolist has market power and can charge a higher price than a competitive industry. As a result, a profit-maximizing monopolist produces less output than a perfectly competitive industry. The monopolist will produce where MR=MC, but this output level will be lower than the output level in a perfectly competitive industry where P=MC. The monopolist may or may not engage in more research and development activity than a perfectly competitive firm, depending on the industry and the level of competition. The monopolist may also produce at a point where demand is elastic or inelastic, depending on the elasticity of demand. However, in general, a monopolist will not produce at the unit elastic point on the market demand curve.

A Profit-Maximizing Monopolist