In the long run under monopoly,
A)the MC curve will lie to the left of the output at which AC and AR meet.
B)MC = MR = P.
C)MC = MR = AR.
D)the MC curve will lie to the right of the output at which AC and AR meet.

Question

Quizplus · Accepted Answer

In the long run under monopoly, the monopolist will produce where marginal cost (MC) equals marginal revenue (MR), but not necessarily where MC equals average revenue (AR) or price (P). The MC curve will lie to the left of the output at which average cost (AC) and average revenue (AR) meet, indicating that the monopolist is producing less than the socially optimal output level.

In the Long Run Under Monopoly