For a monopolist,the profit-maximizing level of output occurs where

Question

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC), as long as the MR is greater than the average variable cost (AVC), which ensures that the monopolist is covering all of its variable costs. MC = price is not applicable as monopoly firms have the power to set prices. MC=0 is not necessarily true as the monopolist can still make a profit even with positive marginal costs. MR = AC is not the profit-maximizing point as average cost (AC) includes fixed costs, which should not be taken into account when deciding the profit-maximizing quantity.

For a Monopolist,the Profit-Maximizing Level of Output Occurs Where