For a Monopolist, at the Profit-Maximizing Level of Output, Price

question 147

Multiple Choice

For a monopolist, at the profit-maximizing level of output, price is:

• A)equal to marginal revenue.
• B)equal to marginal cost.
• C)chosen according to demand.
• D)increasing.

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Definitions:

Marginal Revenue

The additional earnings gained by selling an extra unit of a good or service.

Marginal Cost

Expenses incurred in creating one more unit of a product.

Perfect Competition

A market structure characterized by a large number of buyers and sellers, identical products, and no barriers to entry or exit.

Perfect Competition

A market structure characterized by an infinite number of small firms, identical products, no barriers to entry or exit, and perfect information, leading to price takers.