The monopoly maximizes profit by setting:
a. price equal to marginal cost
b. price equal to marginal revenue
c. marginal revenue equal to marginal cost
d. marginal revenue equal to zero
The main aim of private organizations is to maximize profits. In order to do so, they look to achieve the profit maximization level of production. This can be difficult to achieve in practice.
Answer and Explanation: 1
The correct option is c. marginal revenue equal to marginal cost.
A monopolist produces the number of units at which the marginal revenue is equal to...
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fromChapter 24 / Lesson 6
Learn the profit maximization definition, its importance, and explore the profit maximization theory. See how to calculate profit maximization with examples.