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The monopoly maximizes profit by setting a. price equal to marginal revenue. b. marginal revenue equal to marginal cost. c. price equal to marginal cost. d. marginal revenue equal to zero

Sagot :

(C) price equal to marginal cost.

Monopoly is a market condition with only one seller of a product where there is barriers to entry of others and presence of no substitutes price equal to marginal cost.

The level of profit is maximised in a monopoly when the marginal cost equal the marginal revenue. They choose an output and price certainly without exceeding the marginal revenue. The price is greater than average revenue of the production and get the profit maximise output.

In case monopoly quantity will be lower and the price will be higher than that of a competitive firm. Marginal revenue can only be zero when the production falls or not have been started yet.

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