A profit-maximizing monopolist will produce the level of output at which
A)average revenue is equal to average total cost.
B)average revenue is equal to marginal cost.
C)marginal revenue is equal to marginal cost.
D)total revenue is equal to opportunity cost.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will produce the level of output where marginal revenue is equal to marginal cost. This is because when marginal revenue is greater than marginal cost, the firm can increase profits by producing more output. On the other hand, when marginal revenue is less than marginal cost, the firm can increase profits by producing less output. Therefore, the monopolist will choose the level of output at which these two are equal.

A Profit-Maximizing Monopolist Will Produce the Level of Output at Which