To maximize profit,a natural monopolist will produce at a point where marginal revenue is equal to marginal cost.

Question

Quizplus · Accepted Answer

This statement is true as a natural monopolist has no close substitutes, and hence can control the market price. Therefore, to earn the maximum profit, the monopolist will produce where its marginal revenue (MR) equals marginal cost (MC), as this is the level of output that will maximize the difference between total revenue and total cost.

To Maximize Profit,a Natural Monopolist Will Produce at a Point