Question

To figure out price and quantity in a monopoly, a business finds the point at which marginal cost equals _____. profits marginal revenue market share

Answer 1

To figure out price and quantity in a monopoly, a business finds the point at which marginal cost equals marginal revenue.

Marginal Revenue is the revenue gained by producing one additional unit of a product or service.

You should also note that is normally upheld that the revenue generated by the last unit of product or service that the firm has sold. Whereas Marginal Cost is the cost of producing one additional unit of product or service by the firm.

Therefore, to figure out price and quantity it needs to match both the Marginal Cost and Marginal Revenue.

Answer 2

To figure out price and quantity in a monopoly, a business finds the point at which marginal cost equals marginal revenue.

Explanation:

• A situation of monopoly exists when there are one producer or company and a number of consumers.  

• There is no competition for the company in the market. The manufacturer can decide on the price and the level of quantity.  

• The marginal revenue is the revenue gained by producing one additional unit of a product or service.  

• The ‘marginal cost’ is the cost of producing one ‘additional unit’ of product or service by the firm. To know the price and quantity there has to be a point where MC = MR.

Learn more about marginal revenue

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