To maximize profit,a monopolist should produce the level of output at which
A)price equals marginal cost
B)price equals marginal revenue and marginal cost
C)price equals marginal revenue
D)marginal revenue equals marginal cost
E)price equals average total cost

Question

Quizplus · Accepted Answer

For a monopolist, profit is maximized where marginal revenue equals marginal cost (MR=MC). At this point, the additional revenue earned from producing one more unit is just equal to the additional cost of producing that unit, which means any further production would decrease profit. Therefore, the monopolist should produce at the point where MR=MC to maximize profit.

To Maximize Profit,a Monopolist Should Produce the Level of Output