A Monopolist Maximizes Profits by

question 652

Multiple Choice

A monopolist maximizes profits by

• A)producing an output level where marginal revenue equals marginal cost.
• B)charging a price that is greater than marginal revenue.
• C)earning a profit of (P - MC) x Q.
• D)Both a and b are correct.

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors.

Comparative Advantage

An economic theory that describes how countries or individuals can gain by specializing in the production of goods and services for which they have a lower opportunity cost, leading to beneficial trade.

Absolute Advantage

The ability of a country or entity to produce a good more efficiently (using fewer resources) than another country or entity.