Question

Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing pure monopoly occurs where ____.A. marginal cost equals average revenueB. marginal revenue equals average costC. average total cost equals average revenueD. marginal revenue equals marginal cost

Answer 1

Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing pure monopoly occurs where

D. marginal revenue equals marginal cost

Explanation:

• Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing pure monopoly occurs where

• D. marginal revenue equals marginal cost
• In business, the production is done at the level where marginal revenue is equals to marginal cost to maximize the output.
• When the marginal revenue is greater than the marginal cost, it pays you more.
• Each unit added which is sold will add more to revenue than to costs.
• Marginal cost is the cost which occurs due to the increase in cost a company incurs by producing one extra unit of goods or services.