What is true about the price that a monopolist charges?

Marketing Jan 12, 2021

Expert Solution

A monopolist faces no competition, so it can charge a price that will exceed company's marginal cost; this is why the monopolist is called a price maker. The monopolist will therefore charge a price that maximizes its profit. The profit-maximizing price and quantity are represented by the point at which the marginal revenue equals marginal cost. In a monopoly market, demand curve is downward-sloping, so monopolist must decrease its price to sell more units of a good.

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