If a profit maximizing monopolist faces a linear demand curve and has zero marginal cost, it will produce at:
A)lowest point of marginal revenue curve
B)elasticity of demand equals 1
C)lowest point of marginal profit curve
D)all of the choices are correct

Question

Quizplus · Accepted Answer

A monopolist with zero marginal cost and a linear demand curve will produce at the point where marginal revenue equals zero. This is also the point where elasticity of demand equals 1 and the point where marginal profit is zero.

If a Profit Maximizing Monopolist Faces a Linear Demand Curve