At the profit-maximizing output in a monopoly controlled market,the price a monopolist charges is:
A) below marginal cost.
B) above marginal cost.
C) above average total cost.
D) below average total cost.
E) equal to marginal cost.

Question

Quizplus · Accepted Answer

In a monopoly, the monopolist has market power, which means it can choose the price at which it wants to sell its product. To maximize profits, a monopolist must produce the quantity of output where marginal revenue (MR) equals marginal cost (MC). However, since the demand curve faced by the monopolist is downward sloping, the price charged will be higher than the marginal cost. Therefore, the monopolist will charge a price above marginal cost to maximize its profits.

At the Profit-Maximizing Output in a Monopoly Controlled Market,the Price