Which of the following is TRUE for monopolists?
A) They charge a price below average cost, which guarantees above-normal profits.
B) Their marginal revenue increases with output.
C) They maximize profits by producing at the minimum of average costs.
D) They produce all units of output for which marginal revenue is greater than or equal to marginal cost.

Question

Quizplus · Accepted Answer

Monopolists produce all units of output for which marginal revenue is greater than or equal to marginal cost in order to maximize their profits. Option A is false as monopolists charge a price above the average cost to maximize profit. Option B is false because marginal revenue decreases with output for monopolists. Option C is false as monopolists produce where marginal revenue equals marginal cost, not at the minimum of average costs.

Which of the Following Is TRUE for Monopolists