A Monopolist Finds the Price-Output Combination That Maximizes Its Profits

question 118

Multiple Choice

A monopolist finds the price-output combination that maximizes its profits by

• A) equating total revenue and total cost.
• B) equating marginal revenue and marginal cost.
• C) finding the combination for which the difference between marginal revenue and marginal cost is the greatest.
• D) equating price and marginal cost.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production volume changes.

Demand Curve

A visual depiction that illustrates the correlation between a product or service's price and the amount consumers are willing to purchase at different price points.

Profit-maximizing

How a company decides on the price and production rate that leads to the greatest financial gain.

Output Units

The quantity of product or service produced by a company or a production process.