Question

To produce the​ profit-maximizing quantity, a​ monopoly's managers must produce the quantity that

A.sets the marginal revenue (MR​) equal to zero.

B.sets the marginal revenue ​(MR​) equal to the marginal cost ​(MC​).

C.has the lowest possible marginal cost ​(MC​).

D.has the largest difference between marginal revenue ​(MR​) and marginal cost ​(MC​).

Answer 1

To produce the profit-maximizing quantity, a monopoly's managers must produce the quantity that

B).sets the marginal revenue (MR ) equal to the marginal cost (MC ).

The profit-maximizing rule for a monopoly is given by the following formula:

MC=MR

According to this rule the quantity is set at the level where MC curve intersects MR curve.