At what level of output will a profit-maximizing monopolist produce
A)the level of output at which price is equal to average total cost
B)the level of output at which average revenue is equal to marginal cost
C)the level of output at which marginal revenue is equal to marginal cost
D)the level of output at which total revenue is equal to opportunity cost

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will produce where marginal revenue is equal to marginal cost. This is because at this point, the monopolist is maximizing the difference between revenue and cost, which equals profit. Producing at any other level would either result in lower revenue than cost, or lower revenue than could be achieved by producing a higher level of output. Therefore, the answer is C.

At What Level of Output Will a Profit-Maximizing Monopolist Produce