When a Monopolist Chooses to Produce at the Level of Output

question 43

Multiple Choice

When a monopolist chooses to produce at the level of output where marginal cost equals marginal revenue:

• A)profits are maximized.
• B)price is equal to marginal revenue.
• C)price is equal to average total costs.
• D)total revenue is maximized.

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Definitions:

Import Quota

A government-imposed limit on the quantity or value of a particular good that can be imported into a country.

Equilibrium Price

The price at which the market is in equilibrium, that is, the quantity of a good or service demanded equals the quantity of that good or service supplied; also referred to as the market-clearing price.

Import Quota

A government-imposed limit on the quantity of a certain good that can be imported into a country, used to protect domestic producers.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market stability.