Profit-maximizing monopolists choose a level of output such that:
A) average total cost is minimized.
B) price equals marginal revenue but exceeds average variable cost.
C) price equals marginal cost but exceeds average variable cost.
D) marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

Profit is maximized when the marginal revenue equals the marginal cost. Therefore, a monopolist will choose the level of output where the marginal revenue equals the marginal cost, which is option D. The other choices do not necessarily lead to profit maximization.

Profit-Maximizing Monopolists Choose a Level of Output Such That