A Monopolist Maximizes Its Profit by Producing the Amount of Output

question 373

Multiple Choice

A monopolist maximizes its profit by producing the amount of output that sets

• A) total revenue equals total cost.
• B) marginal revenue equals marginal cost.
• C) marginal revenue equals zero.
• D) price equals marginal cost.

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Definitions:

Profit-Maximizing Principle

An economic concept that companies aim to achieve where they generate the maximum possible profits by adjusting output levels.

Marginal Benefit

The supplemental value or usefulness derived from using another unit of a good or service.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Net Benefit

The total positive impact or gain subtracted by the total cost or negative impact, typically used in the analysis of business or policy decisions.