The first-order condition for a monopoly maximizing its profit is: A) P − (dC(Q)/dQ) = 0. B) (dR(Q)/dQ) − (dC(Q)/dQ) = 0. C) (dR(Q)/dQ) − (dC(Q)/dQ)

Question

The first-order condition for a monopoly maximizing its profit is: A) P − (dC(Q)/dQ) = 0. B) (dR(Q)/dQ) − (dC(Q)/dQ) = 0. C) (dR(Q)/dQ) − (dC(Q)/dQ) < 0. D) (d²R(Q)/dQ²) − (d²C(Q)/dQ²) < 0.

Quizplus · Accepted Answer

The first-order condition for a monopoly maximizing its profit is given by (dR(Q)/dQ) − (dC(Q)/dQ) = 0, where R(Q) and C(Q) are the revenue and cost functions, respectively. This condition states that the marginal revenue should be equal to the marginal cost for the monopolist to maximize its profit. Therefore, the correct choice is B.

The First-Order Condition for a Monopoly Maximizing Its Profit Is