When a monopolist maximizes its profit by selling a positive amount:

Question

Quizplus · Accepted Answer

The monopolist maximizes its profit by producing the quantity where its marginal revenue (MR) equals its marginal cost (MC). This is the profit-maximizing (or cost-minimizing) output level, where the difference between MR and MC is largest. If MR exceeds MC, the monopolist can increase its profit by producing more; if MR is less than MC, the monopolist can increase its profit by producing less. If MR is equal to MC, the monopolist is already producing the output level that maximizes its profit. Therefore, the correct choice is A, as MR must equal MC at the output level where the monopolist maximizes its profit.

When a Monopolist Maximizes Its Profit by Selling a Positive