Asked by Yahya Naqvi on May 16, 2024
Verified
In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to
A) average total cost.
B) marginal revenue.
C) average variable cost.
D) average cost.
Marginal Cost
The cost of producing one additional unit of a product, which varies depending on the level of production.
Marginal Revenue
The gain in revenue from disposing of one additional unit of a good or service.
- Become versed in the concept of maximizing earnings (MR=MC) and its applicability to both monopolistic and competitive firms.
- Analyze the effects of marginal cost changes on monopolist's output and pricing decisions.
Verified Answer
AB
Aleseng BoitumeloMay 19, 2024
Final Answer :
B
Explanation :
In the long run, a pure monopolist maximizes profits by producing at the output level where marginal cost (MC) is equal to marginal revenue (MR). This is the profit-maximizing condition for all firms, including monopolies.
Learning Objectives
- Become versed in the concept of maximizing earnings (MR=MC) and its applicability to both monopolistic and competitive firms.
- Analyze the effects of marginal cost changes on monopolist's output and pricing decisions.
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