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JAMB Economics 2001 Question 18

Question 18

Market Structures

In the long-run, a monopolist maximizes his profit when the marginal cost equals

  1. A.total revenue
  2. B.marginal revenue
  3. C.average cost
  4. D.price
Show the answer and explanation

Answer: B (marginal revenue)

Explanation

Every profit-maximising firm, including a monopolist, produces where marginal cost equals marginal revenue.