For a monopolist that produces in the short run and does not price discriminate, price always has to be
A)equal to marginal cost at the profit-maximizing quantity
B)equal to marginal revenue at the profit-maximizing quantity
C)greater than marginal cost at the profit-maximizing quantity
D)less than marginal cost at the profit-maximizing quantity
E)less than marginal revenue at the profit-maximizing quantity

Question

Quizplus · Accepted Answer

For a monopolist that produces in the short run and does not price discriminate, the profit-maximizing quantity is where marginal revenue (MR) equals marginal cost (MC). However, the price charged will be higher than MC, in order to maximize profits. Therefore, the correct answer is C - the price will always be greater than marginal cost at the profit-maximizing quantity.

For a Monopolist That Produces in the Short Run and Does