1) Which of the following is NOT true for monopoly? A) The profit maximizing output is...

1) Which of the following is NOT true for monopoly? A) The profit maximizing output is the one at which marginal revenue and marginal cost are equal. B) Average revenue equals price. C) The profit maximizing output is the one at which the difference between total revenue and total cost is largest. D) The monopolist's demand curve is the same as the market demand curve. E) At the profit maximizing output, price equals marginal cost

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Expert Solution

Option E is correct.

the profit maximising level of output is determined where the marginal revenue equals the marginal cost and the corresponding point on the demand curve determines the equilibrium price. Hence the price is not equal to the marginal cost, it is much higher. Price equals the marginal cost under perfect competition.

Rahul Sunny answered 1 year ago

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