For a monopolist,at the profit-maximizing level of output:
A)price is greater than marginal revenue.
B)marginal revenue is greater than average revenue.
C)average revenue is greater than price.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

A monopolist maximizes profits at the output level where marginal revenue equals marginal cost. However, since the demand curve faced by a monopolist is downward-sloping, the marginal revenue at each level of output is less than the price. Therefore, the monopolist must set a price greater than marginal revenue in order to sell the desired level of output.

For a Monopolist,at the Profit-Maximizing Level of Output