Question

marginal cost for a single-price monopolist question 10 options: a) varies with quantity sold, just like a perfectly competitive firm's marginal cost. b) does not vary with quantity sold. c) is always more than the price. d) is constant as the quantity sold increases. e) is the same as the average variable cost at all levels of quantity produced.

Answer 1

The marginal cost for a single-price monopolist varies with quantity sold, similar to a perfectly competitive firm's marginal cost. While a monopolist can influence prices due to a lack of competition, it bases its production levels on where marginal revenue equals marginal cost.

Step-by-step explanation:

The marginal cost for a single-price monopolist varies with quantity sold, just like a perfectly competitive firm's marginal cost. This is similar to a perfectly competitive firm, where marginal cost is calculated by dividing the change in total cost by the change in quantity of output produced. For a monopolist, despite being the sole producer, the costs associated with producing one more unit (marginal cost) still change with the level of output, similarly to firms in perfect competition.

In contrast to a perfectly competitive firm which is a price taker, a monopolist has some control over the price it charges due to the absence of competition and can influence market prices to some extent. However, when it comes to profit maximization, a monopolist, like a competitive firm, will produce at the quantity where marginal revenue equals marginal cost. The decision on how much to produce will be based on detailed information about how changes in output levels affect marginal revenue and marginal costs.