A profit-maximizing monopoly will never operate in the portion of the demand curve with MR equal to
A)3.
B)2.
C)1.
D)-1.

Question

Quizplus · Accepted Answer

A profit-maximizing monopoly will always choose its output level at the point where MR=MC. In order for this output level to be profitable, it must be in the portion of the demand curve where MR is greater than or equal to 0. Therefore, since MR=-1 in portion D of the demand curve, a profit-maximizing monopoly will not operate in that portion.

A Profit-Maximizing Monopoly Will Never Operate in the Portion of the Demand