Which statement is TRUE?
A)A monopoly firm is a price taker.
B)MR P if the demand curve is downward sloping.
C)MR = MC is a profit-maximizing rule for any firm.
D)In monopoly,P = MC when profits are maximized.

Question

Which statement is TRUE?
A)A monopoly firm is a price taker.
B)MR > P if the demand curve is downward sloping.
C)MR = MC is a profit-maximizing rule for any firm.
D)In monopoly,P = MC when profits are maximized.

Quizplus · Accepted Answer

MR = MC is the profit-maximizing rule for any firm, including a monopoly. In a monopoly, MR is always less than price (P) because the firm must lower the price it charges in order to sell additional units of output. Therefore, the statement in option B is false. In a monopoly, the profit-maximizing level of output occurs where MR = MC, and the price charged for that output is determined by the demand curve. Therefore, statement A and D are also false.

Which Statement Is TRUE