When marginal revenue is equal to marginal cost,the monopolist
A)should increase output to maximize profits
B)will maximize profits or minimize losses
C)will produce where price = ATC

Question

Quizplus · Accepted Answer

At the point where marginal revenue is equal to marginal cost, the monopolist is maximizing their profits or minimizing their losses. Therefore, option B is the best choice. Option A is incorrect because increasing output may cause marginal costs to exceed marginal revenue, resulting in reduced profits. Option C is incorrect because producing where price is equal to average total cost is a breakeven point, and the aim of a monopolist is to earn profits, not just earn back their costs.

When Marginal Revenue Is Equal to Marginal Cost,the Monopolist