A monopolist charges a price which is ______ than the marginal cost. •
| A monopolist charges a price which is ______ than the marginal cost.
A. greater
B. less
C. equal
D. None of these
Right Answer is: A
SOLUTION
• Monopoly- A market structure where there is a single seller & many buyers of a commodity.
• Profit maximisation level in the case of Monopoly is determined by MR=MC (MC=Marginal Cost, MR= Marginal Revenue) but the monopolist cannot charge price equals to Marginal Cost since the demand curve lies above Marginal Cost Curve.
• Hence, a monopolist charges a price which is greater than the Marginal Cost.
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