CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

If a firm has a monopoly over the sale of photographic paper and seeks to maximize profits, it ______
A. adjusts the price of the product until demand becomes perfectly inelastic.
B. will set the price of the product equal to the marginal cost of production.
C. will set the price of the product so that its marginal revenue equals its marginal cost.
Explanation: Unless this is true, the monopolist will be able to increase profits by either increasing or decreasing price.

User Contributed Comments 2

User Comment
Oksanata profit-maximizing quantity for monopoly occurs when MR=MC, but price occurs on Demand curve for that quantity.
PaulC MR=MC for price-searcher Firms
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