When looking at a monopolist's level of output,you can expect to find
A)average revenue greater than price.
B)price greater than marginal cost.
C)marginal cost greater than marginal revenue.
D)marginal revenue greater than price.

Question

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC). However, since a monopolist has market power, the price they charge will be greater than MC. Therefore, B is the correct answer. A is incorrect because in a monopolist, average revenue (AR) equals price (P) since they are the only seller in the market, and AR=P. C is incorrect because in order to maximize profit, MR must be greater than MC, not the other way around. D is incorrect because a monopolist's MR curve is downward sloping, meaning that MR<P, not MR>P.

When Looking at a Monopolist's Level of Output,you Can Expect