To maximize profits, a dominant insurance provider will set the price for insurance such that the marginal revenue of providing coverage is _______ of providing coverage.

Question

Quizplus · Accepted Answer

In a profit-maximizing scenario, a dominant insurance provider, like any firm aiming to maximize profits, will set the price such that the marginal revenue (MR) of providing coverage is equal to the marginal cost (MC) of providing that coverage. This principle is a fundamental concept in microeconomics, ensuring that the firm is operating at its most efficient and profitable point.

To Maximize Profits, a Dominant Insurance Provider Will Set the Price