Question

Question 49 2.5 pts A monopolist is producing at the profit-maximizing output level and charges $44 for each unit. Which of the following is true? Its marginal cost must be greater than $44. ) Its marginal cost must be equal to $44. Its marginal cost must be less than $44. Its average cost must be equal to $44.

Answer 1

A monopolist is a single seller in the market and therefore without any substitute for the product, the demand will always be inelastic That's why a monopolist' will always charge price higher than the "Marginal Cost (Me) Now, the shape of 'Average Total Cost' Curve determines whether the firm will run into super-normal prost, normal profit' or loss, So, the last point though possible cannot always be the case. But, from that theory we can conclude easily that The marginal cost must be less than $44. So, that makes 3rd Option as the correct answer.

Pule AR MR > Quantity figca) As you can see that at proft maximising level of (ма ме The SATC is less than the price. (po Therefore [*> ATC The monopolist is earning a super- normal profit and therefore the last option cannot be true in all cases. That's why the third option will be the correct answer.