Which statement is NOT true about determining the equilibrium price and quantity for a monopolist?
A) Monopolists use the MR = MC rule to determine optimal price and quantity levels.
B) Monopolists do not always earn a profit.
C) Monopolists select the price that is equal to the average total cost.
D) Price is determined by market demand.

Question

Quizplus · Accepted Answer

Monopolists determine the price based on where marginal revenue (MR) equals marginal cost (MC), not where price equals average total cost (ATC). They then use the market demand curve to set the highest price consumers are willing to pay for that quantity.

Which Statement Is NOT True About Determining the Equilibrium Price