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JAMB Economics 2002 Question 29

Question 29

Market Structures

The short-run equilibrium output for a monopolist is determined by the

  1. A.highest point on the total revenue curve
  2. B.minimum point on the average cost curve
  3. C.intersection of the average revenue and the average cost curves
  4. D.intersection of the marginal cost and marginal revenue curves
Show the answer and explanation

Answer: D (intersection of the marginal cost and marginal revenue curves)

Explanation

A monopolist maximises profit at the output where marginal cost equals marginal revenue.