If a firm has a monopoly over the sale of newspapers and seeks to maximize profits, then:
A) it will set the price of the product so that its marginal revenue equals its marginal cost.
B) it adjusts the price of the product until demand becomes perfectly inelastic.
C) it will set the price fo the product equal tot he average total cost of production.
D) it will set the price of the product equal to the marginal cost of production.

Question

Quizplus · Accepted Answer

A monopolist maximizes profit by setting the price where marginal revenue equals marginal cost, not where price equals marginal cost or average total cost.

If a Firm Has a Monopoly Over the Sale of Newspapers