The short-run equilibrium for a monopolist is achieve
The short-run equilibrium for a monopolist is achieve
- A) price equals MC
- B) price equals MR
- C) MR equal MC
- D) MR equal AR
Correct Answer: C) MR equal MC
Explanation
In this Economics question, we are talking about a monopolist. A monopolist is a company or individual that has complete control over the market for a particular product or service. In the short run, the monopolist can set the price of the product or service they offer. The question asks us about the equilibrium point for a monopolist in the short run.
The equilibrium point is the point at which the supply of a product or service meets the demand for that product or service. At this point, there is no excess supply or demand, and the market is said to be in balance. The question asks us how the monopolist can achieve this equilibrium point.
We are given four options to choose from, and we need to choose the correct one. Option A states that the price should equal MC (Marginal Cost). This is incorrect because the monopolist would make zero profit if they set the price equal to MC.
Option B states that the price should equal MR (Marginal Revenue). This is also incorrect because the monopolist would not be maximizing their profit if they set the price equal to MR.
Option D states that MR should equal AR (Average Revenue). This is also incorrect because MR is always less than AR for a monopolist.
The correct answer is Option C, which states that MR (Marginal Revenue) should equal MC (Marginal Cost). This is the correct answer because the monopolist can maximize their profit by setting the price at the point where MR equals MC. At this point, the monopolist can produce the quantity of goods that will maximize their profit.
To summarize, the correct short-run equilibrium for a monopolist is achieved when MR equals MC. This is the point at which the monopolist can maximize their profit.