Question

 

Which of the following is true with regard to monopoly?

a A monopolist would never engage in rent seeking

b. Government oversight of monopolies should never be encouraged 

c. There is no deadweight loss associated with a monopoly outcome

d. A monopolist charges a price where marginal cost is equal to marginal revenue.

Answer 1

As we know, a monopoly is a single seller to the market and has a control over the market, and a monopolist will always produce a profit maximised output which is given by the equality between marginal revenue and marginal cost, so the right answer is option D, that is, a monopolist charges a price where marginal cost is equal to the marginal value.