Answer (B) is correct . A pure monopolist maximizes profits by producing the output at which marginal revenue (MR) equals marginal cost (MC). Given that the demand curve is
Answer (A) is incorrect because The excess of P 4 over P 3 is not meaningful in this context. Answer (C) is incorrect because P 1 is established with reference to the lowest point on the MC curve (N). A monopolist is not constrained to seek the lowest average total cost. Answer (D) is incorrect because P 2 – P 1 is the difference between the monopolist’s profit-maximizing price and the lowest ATC, not a meaningful amount in this context.
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