A monopolist sets price at a point on the _______ curve,corresponding to the rate of output determined by the intersection of _______.
A) Demand;marginal revenue and marginal cost
B) Marginal revenue;marginal revenue and marginal cost
C) Average total cost;price and marginal cost
D) Demand;average total cost and marginal cost

Question

Quizplus · Accepted Answer

A monopolist sets price at a point on the demand curve, corresponding to the rate of output determined by the intersection of marginal revenue and marginal cost. This is because the monopolist faces a downward sloping demand curve, meaning that to sell more units, they must lower the price. However, when they lower the price, they also lower the revenue generated from each unit sold (marginal revenue). The monopolist will want to produce where marginal revenue equals marginal cost to maximize profit.

A Monopolist Sets Price at a Point on the _______