A monopolist's profit-maximizing price and output correspond to the point on a graph
A)where average total cost is minimized.
B)where total costs are the smallest relative to price.
C)where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.
D)where price is as high as possible.

Question

Quizplus · Accepted Answer

A monopolist's profit-maximizing point is where marginal revenue (MR) equals marginal cost (MC). This is because at this point, the monopolist is producing an output level where the additional revenue earned from selling one more unit (MR) is equal to the additional cost of producing one more unit (MC). Additionally, they charge the price on the market demand curve for that output, which corresponds to the highest price consumers are willing to pay for that quantity. Therefore, C is the correct answer.

A Monopolist's Profit-Maximizing Price and Output Correspond to the Point