Question
Asked Nov 6, 2019

What economic criteria does a profit maximizing monopolist use to decide how much to produce?

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Step 1

Monopoly is a type of market structure in which there is only a single seller. The monopolist is a price maker and there are restrictions on entry of new firms in the market.

Step 2

A profit-maximizing monopolist will always produce at a point at which the marginal revenue equals the marginal cost. Before that point, marginal revenue is gretaer than the marginal cost and the monopolist can earn higher profits by producing more. After that point, the marginal cost is greater than the marginal...

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