Which of the following is (are) true?
A) A monopoly firm is a price taker.
B) MR P if the demand curve is downward sloping.
C) MR = MC is a profit-maximizing rule for any firm.
D) All of the above are true.

Question

Which of the following is (are) true?
A) A monopoly firm is a price taker.
B) MR > P if the demand curve is downward sloping.
C) MR = MC is a profit-maximizing rule for any firm.
D) All of the above are true.

Quizplus · Accepted Answer

C) MR = MC (Marginal Revenue equals Marginal Cost) is a fundamental profit-maximizing condition applicable to all firms, regardless of their market structure. This rule states that a firm maximizes profit by producing up to the point where the additional revenue from selling one more unit equals the additional cost of producing that unit. Options A and B are incorrect because a monopoly firm is a price maker (not a price taker), and MR (Marginal Revenue) is less than P (Price) if the demand curve is downward sloping, due to the price effect of selling additional units in imperfectly competitive markets.

Which of the Following Is (Are) True