When a monopolist chooses the level of output where marginal cost equals marginal revenue:
A) profits are maximized.
B) price is set at marginal revenue.
C) price is equal to average total costs.
D) total revenue is maximized.

Question

Quizplus · Accepted Answer

When a monopolist chooses the level of output where marginal cost equals marginal revenue, profits are maximized. This is because at this level, the additional revenue generated by selling an additional unit of the good is equal to the additional cost of producing that unit, which means that the monopolist is producing at the most efficient point.

When a Monopolist Chooses the Level of Output Where Marginal