If a monopolist draws a set of cost and revenue curves to represent the firm, he would show that
A) price intersects average total cost at the average total cost curve's minimum
B) price lies above the marginal revenue curve
C) marginal revenue at every output level equals zero
D) marginal cost at every output level equals zero
E) average total cost equals marginal cost

Question

Quizplus · Accepted Answer

In a monopoly, the price is set above the marginal revenue curve because the monopolist has market power and faces a downward-sloping demand curve, meaning they can set prices above marginal cost to maximize profits.

If a Monopolist Draws a Set of Cost and Revenue