Which of the following is true of a profit-maximizing monopolist firm?

Q: What is true for a profit

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.

Which is NOT TRUEQuestion 5 options:P > MCThe firm operates on the demand curve where |e| < 1

for a profit maximizing monopolist?

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Which is NOT TRUEQuestion 5 options:P > MCThe firm operates on the demand curve where |e| < 1
What is true for a profit
Which of the following is necessarily true of the profit
Which of the following is not true for a profit
What is true of the profit

As Q increases, MR falls faster than Average Revenue

Profit maximizing Q for the firm is determined where MC = MR

Answer & Explanation

Solved by verified expert

The firm operates on the demand curve where |e| < 1

Step-by-step explanation

The firm operates on the demand curve where |e| < 1

Firms in a monopolistic market maximize total profit at the point of quantity Q where the marginal cost to marginal revenue. For a monopolist, price exceeds marginal cost. Monopolist firms have a downward-sloping demand curve, then marginal revenue will be less than average revenue and can even be negative. The firm operates on the prices on the demand curve for any quantity produced.

What is true for a profit

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.