The price charged by a monopoly firm is the market price (demand curve) at which:
A) MR = MC, and usually P MR and P MC.
B) the firm is just breaking even.
C) the firm makes a normal profit.
D) MR = MC = P.

Question

The price charged by a monopoly firm is the market price (demand curve) at which:
A) MR = MC, and usually P > MR and P > MC.
B) the firm is just breaking even.
C) the firm makes a normal profit.
D) MR = MC = P.

Quizplus · Accepted Answer

In a monopoly, the firm sets its price where marginal revenue (MR) equals marginal cost (MC), which typically results in a price (P) that is higher than both MR and MC, reflecting the firm's market power and ability to set prices above marginal costs.

The Price Charged by a Monopoly Firm Is the Market