For a monopolist: Price is greater than marginal revenue. Marginal revenue equals zero. Marginal cost equals...

For a monopolist:

Price is greater than marginal revenue.

Marginal revenue equals zero.

Marginal cost equals zero.

Average total cost equals marginal cost.

Expert Solution

The correct answer is: a. Price is greater than marginal revenue.

Explanation:

The optimal point of production (profit maximizing level of output) for a monopolist is to produce at the point where Marginal Revenue (MR) = Marginal Cost (MC). Since MR curve 1/2 of AR curve (demand curve), the price corresponding to MR = MC on demand curve is higher than MR.

Rahul Sunny answered 2 years ago

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