For the monopolist, at the profit maximizing level of output A)price is greater than marginal cost (p mc) B)price is equal to marginal cost (p=mc) C)price may be greater than or equal to marginal cost, D)price is less than marginal cost (p

Question

For the monopolist, at the profit maximizing level of output
A)price is greater than marginal cost (p > mc)
B)price is equal to marginal cost (p=mc)
C)price may be greater than or equal to marginal cost,
D)price is less than marginal cost (p <mc)

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing level of output is where marginal revenue equals marginal cost (MR = MC). However, because the monopolist faces a downward-sloping demand curve, the price (P) charged at this quantity is higher than the marginal cost (MC), leading to P > MC. This is a key characteristic of monopoly power, allowing the monopolist to earn positive economic profits.

For the Monopolist, at the Profit Maximizing Level of Output