A monopolist earns a profit whenever

Question

Quizplus · Accepted Answer

A monopolist will earn a profit whenever the price exceeds the average total cost, as this means that the revenue received per unit sold is greater than the average cost per unit, resulting in a positive profit. Option A is incorrect as a firm can earn zero profit, but still continue production. Option B is incorrect since a monopolist will maximize profits at the level where marginal revenue equals marginal cost, but this does not necessarily ensure a positive profit. Option C is incorrect as profits can occur even if price does not necessarily exceed average variable cost. Option D is incorrect since marginal revenue being positive does not necessarily ensure a positive profit.

A Monopolist Earns a Profit Whenever