An unregulated pure monopolist will maximize profits by producing that output at which
A) P = MC.
B) P = ATC.
C) MR = MC.
D) MC = AC.

Question

Quizplus · Accepted Answer

A monopolist will always try to maximize its profits, and the point of profit maximization is where marginal revenue (MR) is equal to marginal cost (MC). At this point, the monopolist will produce the quantity of output that consumers are willing to pay for, at the minimum possible cost. Therefore, choice C is the correct answer. Choices A and B are not correct because they do not take into account the monopolist's cost structure, and choice D is incorrect because the monopolist's average cost (AC) is not relevant to its profit maximization decision.

An Unregulated Pure Monopolist Will Maximize Profits by Producing That