According to "total revenue & total cost" approach, a monopoly firm attains equilibrium when the difference between its total revenue and total cost is the _____________.

maximum

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minimum

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negative

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less than zero

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Solution

The correct option is A maximum
A monopolist's main aim is profit maximization, thus they will always choose to operate at that point where the difference between total revenue and total cost is maximum. In the diagram above the maximum difference is given by the line CB. This corresponds with the maximum of the profit under the TR-TC approach.

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Similar questions

List-I	List-II
(a) Normal Profit	I. Excess of total revenue over total explicit cost
(b) Economic profit	II. Total revenue equals total economic cost
(c) Accounting profit	III. Excess of total revenue over total of explicit and implicit costs and a normal rate of return

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