A profit-maximising monopolist will choose a level of output at where:
A)marginal revenue equals the price
B)average revenue is equal to average total cost
C)marginal revenue is equal to marginal cost
D)average total cost is at a minimum

Question

Quizplus · Accepted Answer

A profit-maximising monopolist will choose the level of output where marginal revenue (MR) is equal to marginal cost (MC). This is because at any other level of output, either MR>MC or MR<MC, which would mean the monopolist could increase their profits by either producing more or producing less. Therefore, the monopolist will produce where MR=MC to maximise their profits.

A Profit-Maximising Monopolist Will Choose a Level of Output at Where