The most profitable price for a monopolist is
A)the highest price a consumer is willing to pay for the monopolist's product.
B)the price at which demand is unit elastic.
C)a price that maximizes the quantity sold.
D)found where the profit-maximizing quantity hits the demand curve.

Question

Quizplus · Accepted Answer

The most profitable price for a monopolist is found where the profit-maximizing quantity hits the demand curve. This is because at this point, the marginal revenue (the additional revenue obtained from selling one additional unit) equals the marginal cost (the additional cost incurred from producing one additional unit), which is the point of profit maximization. Option A is incorrect because the highest price a consumer is willing to pay may not necessarily maximize profit. Option B is incorrect because a unit-elastic demand means that a change in price will result in an equal change in quantity demanded, which may not necessarily lead to profit maximization. Option C is incorrect because maximizing the quantity sold does not necessarily maximize profit.

The Most Profitable Price for a Monopolist Is