The profit-maximizing price for a monopoly is a price that
A)exceeds marginal cost.
B)exceeds fixed costs.
C)exceeds average revenue.
D)equals marginal revenue.

Question

Quizplus · Accepted Answer

A monopoly will charge a price that exceeds marginal cost in order to maximize profits. If the price were equal to marginal cost, the monopoly would not earn any profits. Additionally, the price does not need to exceed fixed costs or average revenue, but it must exceed marginal revenue.

The Profit-Maximizing Price for a Monopoly Is a Price That