Price will always exceed marginal cost for the profit-maximizing monopolist,or any price-setter firm for that matter.

Question

Quizplus · Accepted Answer

The profit-maximizing monopolist or any price-setter firm will always set the price at a level higher than the marginal cost in order to earn profits. This is because the marginal cost represents the cost of producing one additional unit of output, whereas the price is the revenue that the firm earns from selling that unit. If the price were set equal to the marginal cost, the firm would not earn any profit. Therefore, in order to maximize profits, the firm will set a price that is higher than the marginal cost.

Price Will Always Exceed Marginal Cost for the Profit-Maximizing Monopolist,or