Multiple choice

A monopolist is able to maximize his profits when

  1. his output is maximum

  2. he charges a high price

  3. his average cost is minimum

  4. his marginal cost is equal to marginal revenue

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A monopolist maximizes profit at the output level where Marginal Revenue (MR) equals Marginal Cost (MC). At this point, producing one more unit would cost more than it would add to revenue (MC > MR), and producing one less unit would sacrifice profit (MR > MC). Options A, B, and C are incorrect - maximum output, high price, or minimum average cost do not guarantee profit maximization.