For a monopoly,profit per unit of output is
A)marginal revenue minus marginal cost
B)price minus average total cost
C)average total cost minus marginal revenue
D)price minus marginal revenue
E)total revenue minus total cost

Question

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing output level occurs where marginal revenue (MR) equals marginal cost (MC). However, the profit per unit of output is not equal to the difference between MR and MC. Instead, it is equal to the price (P) minus the average total cost (ATC), since the firm charges the highest price consumers are willing to pay given the level of output it produces, while incurring costs for each unit produced. Therefore, the best choice is B, price minus average total cost.

For a Monopoly,profit Per Unit of Output Is