To maximize profit, a monopolist will produce and sell a quantity such that for the last unit sold, marginal revenue equals marginal cost, and charges a price given by the demand curve at that output level.

Question

Quizplus · Accepted Answer

This statement accurately describes the profit-maximizing strategy for a monopolist. By producing and selling at the output level where marginal revenue equals marginal cost, the monopolist is able to minimize costs and maximize profits. Charging the price given by the demand curve at that output level ensures that consumers are willing to pay the highest possible price for the monopolist's product, further increasing profits.

To Maximize Profit, a Monopolist Will Produce and Sell a Quantity