The monopolist will set the price at the level where its profits are maximized.

Question

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A monopolist has the power to set the price of its product as there is no competition. To maximize its profits, the monopolist will set the price where its marginal revenue (the revenue earned by selling an additional unit of the good) equals its marginal cost (the cost of producing an additional unit of the good). This intersection point will be at a higher price than in a competitive market where price is equal to marginal cost. Therefore, the monopolist will charge a higher price and earn higher profits.

The Monopolist Will Set the Price at the Level Where