Many people believe that pure monopolies charge any price they want to without affecting sales. instead, the output level for a profit-maximizing pure monopoly occurs where rev: 05_15_2018 multiple choice marginal revenue equals marginal cost marginal revenue equals average cost marginal cost equals average revenue average total cost equals average revenue

The correct answer is marginal revenue equals marginal cost.

Explanation:

A monopoly is a form of market where there is only a single firm in the market. There is a restriction on the entry and exit of the firms. A monopoly firm is a price maker. It faces a downward-sloping demand curve. It can earn positive economic profits in both the long runs as well as the short run.  

A monopoly firm maximizes its profit at the point where the marginal revenue earned is equal to marginal cost incurred in the production process.

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