What is the profit-maximizing rule for a monopolist?
What will be an ideal response?
A profit-maximizing monopolist will continue to increase production as long as marginal revenue is greater than marginal cost. Thus, maximum profit occurs where marginal revenue is equal to marginal cost. Incidentally, it is worth noting that this profit-maximizing rule applies to all firms no matter the market structure that it operates in.
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Medicaid, welfare payments, and Temporary Assistance to Needy Families are classified as
A) unilateral payments. B) transfer payments. C) gifts. D) income redistribution payments.
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?
A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC. C) Shut down, because AVC > P. D) Shut down, because ATC > P.