Question

To figure out price and quantity in a monopoly, a business finds the point at which marginal cost equals _____. a) Profits b) Marginal revenue c) Market share

Answer 1

ANSWER: b) Marginal revenue

EXPLANATION: Marginal Revenue is the revenue gained by producing one additional unit of a product or service. It is also said as the revenue generated by the last unit of product or service that the firm has sold. Whereas Marginal Cost is the cost of producing one additional unit of product or service by the firm. So, to figure out price and quantity it needs to match both the Marginal Cost and Marginal Revenue.

Answer 2

Generally speaking, to figure out price and quantity in a monopoly, a business finds the point at which marginal cost equals "b) Marginal revenue," since this is the point at which the product can be sold.