A monopolist will
A)never produce at an output level where marginal revenue is positive
B)never produce at an output level where marginal revenue is constant
C)never produce at an output level where marginal revenue is negative
D)never produce at an output level where marginal cost is positive
E)ignore marginal revenue as long as average revenue is positive

Question

Quizplus · Accepted Answer

A monopolist will always produce at an output level where marginal revenue is equal to marginal cost in order to maximize profits. However, since demand is downward-sloping for a monopolist, the marginal revenue curve is below the demand curve and therefore negative. So, the monopolist will not produce at an output level where marginal revenue is positive.

A Monopolist Will