The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?
A)marginal cost and demand
B)marginal cost and marginal revenue
C)average total cost and marginal revenue
D)average variable cost and average revenue

Question

Quizplus · Accepted Answer

A monopolist will maximize profits where marginal cost (MC) equals marginal revenue (MR). This is because if MC is less than MR, the firm can increase profits by producing more, and if MC is greater than MR, the firm can increase profits by producing less. Therefore, the profit-maximizing quantity of output is determined by the intersection of the MC and MR curves.

The Monopolist's Profit-Maximizing Quantity of Output Is Determined by the Intersection