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JAMB Economics 1984 Question 19

Question 19

Market Structures

For a non-discriminating monopolist in Nigeria, price at the profit maximizing output is

  1. A.equal to marginal cost
  2. B.greater than marginal cost
  3. C.greater than average total cost
  4. D.equal to marginal revenue
  5. E.equal to total revenue.
Show the answer and explanation

Answer: B (greater than marginal cost)

Explanation

A monopolist produces where MC = MR, and since its demand curve slopes down, price (AR) is above MR and therefore above MC.