A profit-maximizing monopolist, if producing at all, chooses a level of output where:
A)total revenue is maximized.
B)total cost is minimized.
C)average total cost is minimized.
D)marginal revenue equals marginal cost.
E)price equals marginal cost.

Question

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal revenue equals marginal cost. This is because at any point where MR>MC, the firm can increase profit by producing more output. And where MR<MC, the firm can increase profit by producing less output. Therefore, a monopolist will produce the level of output where MR=MC in order to maximize profit.

A Profit-Maximizing Monopolist, If Producing at All, Chooses a Level