If, at the output where marginal cost equals marginal revenue, both a pure competitor's and a monopolist's marginal revenue is $5.00:
A) both sellers' profit-maximizing price will be $5.00.
B) both sellers' profit-maximizing price will be greater than $5.00.
C) the pure competitor's profit-maximizing price will be $5.00, and the monopolist's profit-maximizing price will be greater than $5.00.
D) the monopolist's profit-maximizing price will be $5.00, and the pure competitor's profit-maximizing price will be greater than $5.00.

Question

Quizplus · Accepted Answer

In a competitive market, price equals marginal cost, so the pure competitor's price will be $5.00. A monopolist, however, can set a price above marginal cost to maximize profits, so their price will be greater than $5.00.

If, at the Output Where Marginal Cost Equals Marginal Revenue