Suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has
A) maximized its total revenue.
B) set price equal to its average cost.
C) maximized the difference between marginal revenue and marginal cost.
D) equated marginal revenue and marginal cost.

Question

Quizplus · Accepted Answer

In profit maximization, a monopolist sets output such that marginal revenue (MR) equals marginal cost (MC), not necessarily maximizing total revenue or setting price equal to average cost.

Suppose We Know That a Monopolist Is Maximizing Its Profits