Asked by Isaac Matsie on Jun 13, 2024

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When marginal revenue is equal to marginal cost,the monopolist

A) should increase output to maximize profits
B) will maximize profits or minimize losses
C) will produce where price = ATC

Marginal Revenue

The extra income a company earns by selling an additional unit of a product or service.

Marginal Cost

The extra expense related to the production of an additional unit of a good or service.

  • Calculate marginal revenue and understand its importance in profit maximization for monopolies.
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NH
Nyjah HenryJun 18, 2024
Final Answer :
B
Explanation :
At the point where marginal revenue is equal to marginal cost, the monopolist is maximizing their profits or minimizing their losses. Therefore, option B is the best choice. Option A is incorrect because increasing output may cause marginal costs to exceed marginal revenue, resulting in reduced profits. Option C is incorrect because producing where price is equal to average total cost is a breakeven point, and the aim of a monopolist is to earn profits, not just earn back their costs.