A monopolist maximizes profit by producing the output at which marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

This is the basic principle of profit maximization for a monopolist. At the point where marginal revenue equals marginal cost, the monopolist can produce the most output while still making a profit. This is because at this point, the additional revenue gained by producing one more unit is equal to the additional cost incurred in producing that unit, so any additional output would result in lower profits.

A Monopolist Maximizes Profit by Producing the Output at Which