For a monopolist that is maximizing profits,
A) price exceeds marginal cost.
B) price equals marginal revenue.
C) price equals average total cost.
D) marginal revenue exceeds price.

Question

Quizplus · Accepted Answer

A monopolist that is maximizing profits will set the price where marginal cost equals marginal revenue. However, since the demand curve is downward sloping, the price that corresponds to that level of output will be above the marginal cost. This means that price will exceed marginal cost.

For a Monopolist That Is Maximizing Profits