ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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total cost
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average variable cost
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marginal revenue but not price
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marginal revenue and price
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Detailed explanation-1: -To maximize profit or minimize losses, a monopoly firm produces the quantity at which marginal cost equals marginal revenue. Its price is given by the point on the demand curve that corresponds to this quantity.
Detailed explanation-2: -The level of output that maximizes a monopoly’s profit is when the marginal cost equals the marginal revenue.
Detailed explanation-3: -Because the monopolist must lower the price on all units in order to sell additional units, marginal revenue is less than price.
Detailed explanation-4: -In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient.
Detailed explanation-5: -A monopolist can determine its profit-maximizing price and quantity by analyzing the marginal revenue and marginal costs of producing an extra unit. If the marginal revenue exceeds the marginal cost, then the firm should produce the extra unit.