Asked by Samuella Agyemang on Jun 25, 2024
Verified
For a monopolist, maximum profits will occur when the gap between average revenue (or price)and average cost is biggest.
Average Revenue
Total revenue from the sale of a product divided by the quantity of the product sold (demanded); equal to the price at which the product is sold when all units of the product are sold at the same price.
Average Cost
is the cost per unit of output, calculated by dividing total costs by the total quantity of output produced.
- Delve into how marginal revenue and marginal cost influence the optimization of profits for a monopolist.
Verified Answer
AS
Abbas SalmanJun 29, 2024
Final Answer :
False
Explanation :
For a monopolist, maximum profits occur where marginal cost equals marginal revenue, not necessarily where the gap between average revenue and average cost is biggest.
Learning Objectives
- Delve into how marginal revenue and marginal cost influence the optimization of profits for a monopolist.
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