Which of the following rules is satisfied when a monopoly maximizes profits?
A)Price = AVC.
B)Price

Name: Which of the following rules is satisfied when a monopoly maximizes profits? A)Price = AVC. B)Price < MC. C)MR = MC.
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Question

Which of the following rules is satisfied when a monopoly maximizes profits?
A)Price = AVC.
B)Price < MC.
C)MR = MC.

Quizplus · Accepted Answer

Maximizing profits involves producing at the point where marginal revenue (MR) equals marginal cost (MC). Therefore, the rule that is satisfied is MR = MC. Price may be higher or lower than the marginal cost (MC) in order to maximize profits, so options A and B are incorrect.

Which of the Following Rules Is Satisfied When a Monopoly