question archive In long run equilibrium, monopoly prices are set at a level where: a
In long run equilibrium, monopoly prices are set at a level where: a
Subject:MarketingPrice:2.88 Bought3
In long run equilibrium, monopoly prices are set at a level where:
a. Price exceeds marginal revenue.
b. Industry demand equals industry supply.
c. Industry demand is less than industry supply.
d. Price exceeds average revenue.
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- The correct choice is: a. Price exceeds marginal revenue.
Monopolists maximize their profits by producing at the point where MR=MCMR=MC both in the short-run and in the long-run. Since a monopolist faces a downward-sloping demand curve, the marginal revenue curve is always below the demand curve. Therefore, in the long-run, a monopolist sets its profit-maximizing price at the point where MR=MCMR=MC and P>MRP>MR.
