For a monopolist the Golden Rule of Output Determination is to set the output rate at the point where marginal revenue equals
A) price.
B) marginal cost.
C) profits.
D) output.
E) zero.

Question

Quizplus · Accepted Answer

The Golden Rule of Output Determination for a monopolist is to set the output rate where marginal revenue (MR) equals marginal cost (MC). This is because MR represents the additional revenue earned from producing one more unit of output, while MC represents the additional cost of producing one more unit of output. At the point where MR=MC, the monopolist is producing the optimal level of output where the additional revenue from selling one more unit is equal to the additional cost of producing it. This output level also maximizes the monopolist's profits. Therefore, the correct answer is B) marginal cost.

For a Monopolist the Golden Rule of Output Determination Is