Question 1
For a monopolist, the profit-maximizing level of output occurs where
◦
MC =
AR.
◦
MC = 0.
◦
MR =
MC.
◦
MC = price.
◦
MR =
AC.
Question 2
A monopolist will be earning positive economic profits
◦ when price equals marginal cost.
◦ when price exceeds average total cost.
◦ whenever marginal revenue equals marginal cost.
◦ at all times, since it controls the market.
◦ whenever marginal revenue is positive.