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Question
A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is
A) $5 per unit, and the monopolist earns zero economic profits.
B) $6 per unit, and the monopolist earns economic profits of $2,000 per month.
C) $6 per unit, and the monopolist earns economic losses of $1,000 per month.
D) $6 per unit, and the monopolist earns economic profits of $3,000 per month.
Answer
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