If a monopoly firm produces the quantity of output at which MR = MC, and charges a price greater than average total cost, it necessarily
A)minimizes the difference between total fixed cost and total variable.
B)maximizes the difference between total fixed cost and total variable cost.
C)maximizes total revenue.
D)earns profit.

Question

Quizplus · Accepted Answer

When a monopoly firm produces the quantity of output at which MR = MC, and charges a price greater than average total cost, it earns profit. This is because the price charged by the firm is greater than the cost of producing the product, which means that each unit sold generates a profit for the firm. Therefore, the correct answer is D.

If a Monopoly Firm Produces the Quantity of Output at Which