The monopolist determines the price and quantity combination that maximizes short-run profits by
A) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.
B) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
C) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
D) finding the quantity at which average revenue and average total cost are furthest apart.

Question

Quizplus · Accepted Answer

A monopolist maximizes short-run profits by producing the quantity at which marginal cost (MC) equals marginal revenue (MR) and then uses the demand curve to determine the price consumers are willing to pay for that quantity.

The Monopolist Determines the Price and Quantity Combination That Maximizes