In which situation would a monopolist be maximizing profit when it produces at an output where MR MC?
A) none because when MR MC, profit is not maximized
B) when the barriers of entry are overcome so that other firms enter
C) when costs keep falling as output increases
D) when price increases as output increases
E) when economic profit is greater than normal profit

Question

In which situation would a monopolist be maximizing profit when it produces at an output where MR > MC?
A) none because when MR > MC, profit is not maximized
B) when the barriers of entry are overcome so that other firms enter
C) when costs keep falling as output increases
D) when price increases as output increases
E) when economic profit is greater than normal profit

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC). If MR > MC, the firm can increase profit by producing more, so profit is not maximized in this situation.

In Which Situation Would a Monopolist Be Maximizing Profit When