A monopolist will not produce at all if the intersection of marginal revenue and marginal cost occurs at a quantity at which average cost lies above the demand curve.

Question

Quizplus · Accepted Answer

This statement is true. A monopolist will only produce if the intersection of marginal revenue and marginal cost occurs at a quantity where they can make a profit. If the average cost is higher than the demand curve, this means that the cost of producing each unit is higher than what consumers are willing to pay for the product. Therefore, the monopolist will not be able to make a profit and will not produce at all.

A Monopolist Will Not Produce at All If the Intersection