Suppose we know that a monopolist is maximizing its profits. Which of the follow

Question

Suppose we know that a monopolist is maximizing its profits. Which of the following must be true? The monopolist has:
A) maximized the difference between marginal revenue and marginal cost. B) equated marginal revenue and marginal cost. C) set price equal to its average cost. D) maximized its total revenue Suppose we know that a monopolist is maximizing its profits. Which of the following must be true? The monopolist has:
A) maximized the difference between marginal revenue and marginal cost. B) equated marginal revenue and marginal cost. C) set price equal to its average cost. D) maximized its total revenue

Explanation / Answer

Hi,

Option B is the correct answer.

A monopolist can maxmize his profit by selecting an output level where Marginal Cost is equal to Marginal Revenue. This level of output ensures maximum output.

Thanks.

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