A monopolist maximizes profit by producing:
A) on the inelastic portion of the demand curve
B) at the level where average cost is minimized
C) at the point where the cost of producing the last unit of output equals price.
D) at the output level where marginal revenue equals marginal cost
E) at the level where the deadweight loss is minimized.

Question

Quizplus · Accepted Answer

A monopolist maximizes profit by producing where marginal revenue (MR) equals marginal cost (MC). This is because producing one more unit at this point will add to the total profit. At any other level, either producing more or less will decrease the total profit.

A Monopolist Maximizes Profit by Producing