Which of the following is TRUE for monopolists? Their marginal revenue increases
ID: 1102982 • Letter: W
Question
Which of the following is TRUE for monopolists?
Their marginal revenue increases with output.
They produce all units of output for which marginal revenue is greater than or equal to marginal cost.
They charge a price below average cost, which guarantees above-normal profits.
They maximize profits by producing at the minimum of average costs.
A.Their marginal revenue increases with output.
B.They produce all units of output for which marginal revenue is greater than or equal to marginal cost.
C.They charge a price below average cost, which guarantees above-normal profits.
D.They maximize profits by producing at the minimum of average costs.
Explanation / Answer
Answer
Option B
They produce all units of output for which marginal revenue is greater than or equal to marginal cost.
The monopolist produces at MR=MC to maximize profit which means it produces at the output above or equal to MR=MC.
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