A monopolist maximizes profits by
A)producing an output level where marginal revenue equals marginal cost.
B)charging a price that is greater than marginal revenue.
C)earning a profit of (P - MC) x Q.
D)Both a and b are correct.

Question

Quizplus · Accepted Answer

A monopolist maximizes profits by producing an output level where marginal revenue equals marginal cost. However, the monopolist will also charge a price that is greater than marginal revenue in order to maximize profits. The profit earned is calculated as (P - MC) x Q. Therefore, both options A and B are correct.

A Monopolist Maximizes Profits by