The profit of a monopolist can be eliminated where price equals
ECONOMICS
JAMB 2013
The profit of a monopolist can be eliminated where price equals
- A. AFC
- B. MC
- C. AC
- D. AVC
Correct Answer: B. MC
Explanation
Monopolies make profits by creating prices that are higher, and output that is lower. Profits would be eliminated when price is equal to marginal cost. That is the cost incurred by a firm by producing one additional unit of a product or service. The monopoly would no longer make profits if the price it charges for its product is equal to the additional cost it incurred in producing that good.
Post an Explanation Or Report an Error
If you see any wrong question or answer, please leave a comment below and we'll take a look. If you doubt why the selected answer is correct or need additional more details? Please drop a comment or Contact us directly. Your email address will not be published. Required fields are marked *