If a monopolist produces to a point at which marginal revenue is greater than marginal cost then:...

Question:

If a monopolist produces to a point at which marginal revenue is greater than marginal cost then:

(a) profits will always be negative.

(b) the incremental cost of producing the last unit is less than the incremental revenue.

(c) profits are being maximized.

(d) the incremental cost of producing the last unit exceeds the incremental revenue.

Monopolist:

A monopolist is a firm that operates in a monopoly. For such a firm, the main aim is to maximize profits. As such, it produces where the marginal cost is equal to the marginal revenue.

Answer and Explanation: 1

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The correct option is (b) the incremental cost of producing the last unit is less than the incremental revenue.

If the marginal revenue is higher...

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What is a Monopoly in Economics? - Definition & Impact on Consumers

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Chapter 7 / Lesson 2
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Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.


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