The monopolist

Question

The monopolist

Quizplus · Accepted Answer

A monopolist has the power to set its price and therefore faces a downward sloping demand curve, leading to a marginal revenue curve that is below the demand curve. To maximize profits, a monopolist produces where marginal cost (MC) equals marginal revenue (MR), which will occur at a lower quantity and higher price than under perfect competition. Therefore, the correct answer is (C). (A) is incorrect because a monopolist is the opposite of a perfect competitor. (B) is incorrect because a monopolist's demand curve is downward sloping. (D) is incorrect because (C) is the correct answer.

The Monopolist