CFA Practice Question

CFA Practice Question

In a monopolistic market, we expect that at equilibrium (monopolist maximizing profit etc.):
A. Market Price = Marginal Revenue > Marginal Cost
B. Market Price > Marginal Revenue = Marginal Cost
C. Market Price = Marginal Revenue = Marginal Cost
Explanation: MR = MC is the profit maximizing output. Market Price which is greater than MR as the monopolist faces a downward sloping demand curve (unlike a producer in a competitive market who faces a flat demand curve).

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