If P = price and MC = marginal cost,the price markup of a monopolist is expressed as _____.
A)(P - Mc./MC
B)(P - Mc./P
C)(MC - P)/MC
D)(MC - P)/P

Question

Quizplus · Accepted Answer

The price markup of a monopolist is expressed as (P - MC)/P. This formula calculates the difference between the price charged and the marginal cost, and then divides that difference by the price. This shows the percentage increase in price over the marginal cost, allowing the monopolist to make a profit from the market power they possess. Therefore, option B is the correct answer.

If P = Price and MC = Marginal Cost,the Price