A monopolist is able to maximize its profits by
A) setting the price at the level that will maximize its per-unit profit.
B) producing output where MR = MC and charging a price along the demand curve.
C) setting output at MR = MC and setting price at the demand curve's highest point.
D) producing maximum output where price is equal to its marginal cost.

Question

Quizplus · Accepted Answer

A monopolist maximizes profits by producing at the quantity where marginal revenue (MR) equals marginal cost (MC) and then charging the highest price consumers are willing to pay for that quantity, which is found on the demand curve. This strategy ensures that the firm is producing efficiently and capturing the maximum area between the price and the cost curve as profit.

A Monopolist Is Able to Maximize Its Profits by