Asked by Natalia Shkuratova on Jun 10, 2024
Verified
A pure monopolist's short-run profit-maximizing or loss-minimizing position is such that price:
A) equals marginal revenue.
B) will vertically intersect demand where MR = MC.
C) will always equal ATC.
D) always exceeds ATC.
Short-run Position
A period in economics where at least one input is fixed, making it a timeframe where not all production conditions can be changed.
Profit-maximizing
A strategy or point where a firm achieves the highest possible profit, given its costs and market demand.
Pure Monopolist
A single seller in a market who has the power to control market prices and output without any competition.
- Comprehend the correlation between demand elasticity and the pricing and output choices of a monopolist.
- Discover the range of output that allows a monopolist to maximize earnings, focusing on marginal cost and the elasticity of demand.
Verified Answer
PS
Peter SteveJun 16, 2024
Final Answer :
B
Explanation :
In a monopolistic market, the profit-maximizing or loss-minimizing condition occurs where marginal revenue (MR) equals marginal cost (MC). The price is then determined by going up to the demand curve from this quantity, which does not necessarily mean price equals MR, ATC, or that price always exceeds ATC.
Learning Objectives
- Comprehend the correlation between demand elasticity and the pricing and output choices of a monopolist.
- Discover the range of output that allows a monopolist to maximize earnings, focusing on marginal cost and the elasticity of demand.