"Unlike a perfect competitor, a profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost." Valuate this statement and explain why it is correct or incorrect.

 

The statement is correct.

A profit-maximizing monopolist produces at an output rate at which marginal revenue exceeds marginal cost.

Step-by-step explanation

Monopolist determines its profit maximizing price and quantity by analyzing marginal cost of producing extra unit and marginal revenue of an extra unit.

Marginal revenue for monopolist decreases as they sell extra unit,

Therefore

monopolist maximizes profit by producing output at point at which marginal revenue MR is greater than marginal cost MC

MR>MC

At this point, monopolist maximizes profits by reducing quantity of output. The firm therefore increases profits by producing an extra unit of output.