On a monopoly graph, the revenue-maximizing quantity occurs where MR equals zero is true.

• A. The spot where MC equals MR
• B. The spot where price equals MC
• C. The spot where MR equals zero
• D. The spot where ATC equals price

Answer: (C)

Marginal revenue shows how revenue changes with one more unit sold. In a monopoly with a downward-sloping demand, lowering price to sell an extra unit means MR falls below price and declines as output grows. Revenue increases while MR is positive, but once MR hits zero, selling one more unit no longer increases total revenue; any further output would actually reduce revenue. So the revenue-maximizing quantity is where MR equals zero. This differs from profit maximization, which happens where MR equals MC (assuming costs rise with output). The other conditions describe either profit-maximizing output or break-even, not the revenue-maximizing point.