In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to
A) average total cost.
B) marginal revenue.
C) average variable cost.
D) average cost.

Question

Quizplus · Accepted Answer

A pure monopolist will choose the level of output where marginal revenue equals marginal cost in order to maximize profits. At this point, the firm will be producing the level of output where the additional revenue from producing one more unit is equal to the additional cost of producing that unit. This is the profit-maximizing level of output.

In the Long Run, a Pure Monopolist Will Maximize Profits