Question

In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to

a. average total cost

b. marginal revenue

c. average variable cost

d. average cost.

Answer 1

In the long run ,a pure monopolist will maximise profits by producing that output at which marginal cost is equal to-

B) Marginal revenue

Pure monopoly means when there is single seller of product and when there is no close substitute is available.they are price maker.when we talk about long run equilibrium then it occurs when monopolist's marginal revenue is equal to long term marginal cost.Since at minimum poinit of LAC = LMC then we have price = LMC in the long run equilibrium.