The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.The firm sells its pennants for $10 each.We can conclude that GoSports is producing a level of output at which:
A)average total cost equals $10.
B)average total cost is greater than $10.
C)marginal revenue equals $10.
D)marginal cost equals marginal revenue.

Question

Quizplus · Accepted Answer

Since GoSports is a profit-maximizing firm, it will produce at a level of output where its marginal cost equals its marginal revenue. The firm sells its pennants for $10 each, therefore, marginal revenue equals $10. Therefore, the best choice is D: marginal cost equals marginal revenue.

The GoSports Company Is a Profit-Maximizing Firm with a Monopoly