How do economists assume that monopolists behave
A)as cost minimizers
B)as profit maximizers
C)as price maximizers
D)as output maximizers

Question

Quizplus · Accepted Answer

Economists generally assume that monopolists behave as profit maximizers, i.e., they try to produce at the level of output where their marginal revenue equals marginal cost, in order to maximize their profits. This is in contrast to the assumption made for perfectly competitive firms, which assume that they behave as price takers and produce where marginal cost equals price. Monopolists, on the other hand, have the ability to influence the price by controlling the output and, therefore, tend to set higher prices to earn higher profits.

How Do Economists Assume That Monopolists Behave