Q362
A monopolist is able to maximize his profits when
A.
His output is maximum
B.
He charges high price
C.
His average cost is minimum
D.
His marginal cost is equal to marginal revenue
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
A monopolist is able to maximize his profits when his marginal cost is equal to marginal revenue. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC.