Because monopolists charge a price in excess of marginal cost, it must be the case that monopolists:
A)earn a positive economic profit.
B)earn a negative economic profit.
C)produce more than the socially optimal level of output.
D)produce less than the socially optimal level of output.

Question

Quizplus · Accepted Answer

The marginal benefit to society of the last unit produced is measured by price. Thus, if price is greater than marginal cost, this implies that the marginal benefit to society of the last unit produced is greater than the marginal cost to society of the last unit produced, so that society would benefit if output were to increase.

Because Monopolists Charge a Price in Excess of Marginal Cost