A monopolist is able to maximize his profits when _________________.

His output is maximum

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He charges a high price

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His average cost is minimum

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His marginal cost is equal to marginal revenue

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Solution

The correct option is D His marginal cost is equal to marginal revenue
A monopolist is able to maximize his profits when his marginal cost is equal to marginal revenue. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC.

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