A profit-maximizing monopolist produces the quantity at which ________.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist produces the quantity at which marginal revenue (MR) equals marginal cost (MC). This is because producing any extra unit of output beyond this point would result in a decrease in profit, as the cost of producing the additional unit would be greater than the revenue earned from selling it. Therefore, the correct choice is C, where MR = MC. Choices A and D are not correct, as price or average total cost are not relevant to the profit-maximizing output decision of a monopolist. Choice B is also not correct, as producing at marginal cost would result in lower profits, as the monopolist is able to charge a higher price due to their market power.

A Profit-Maximizing Monopolist Produces the Quantity at Which ________