question archive Which of the following is true at the profit-maximizing price and quantity under monopoly? a) P = MC
Which of the following is true at the profit-maximizing price and quantity under monopoly? a) P = MC
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Which of the following is true at the profit-maximizing price and quantity under monopoly?
a) P = MC.
b) P > MC.
c) P = MR.
d) P = ATC.
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The answer is b).
In a monopoly, firms will produce such that marginal revenue is equal to marginal cost, i.e., MR = MC. Since firms face the entire market demand curve that is downward sloping, marginal revenue is lower than price, i.e., P > MR. It follows that P > MC.
