The correct answer is: C. MR = MC.
A monopolist is the only seller of a good or service in a market. As a result, it has a great deal of market power and can set its own prices. The monopolist’s goal is to maximize profits, which it does by producing the level of output at which marginal revenue (MR) equals marginal cost (MC).
Marginal revenue is the additional revenue that a firm earns by selling one more unit of output. Marginal cost is the additional cost that a firm incurs by producing one more unit of output. When MR equals MC, the firm is producing at the point where the additional revenue that it earns from selling one more unit of output is equal to the additional cost that it incurs from producing that unit. This is the point at which the firm is maximizing its profits.
Option A is incorrect because a monopolist does not necessarily set its price equal to its marginal cost. In fact, a monopolist will often set its price above its marginal cost in order to earn a profit.
Option B is incorrect because a monopolist does not necessarily set its price equal to its average cost. In fact, a monopolist will often set its price above its average cost in order to earn a profit.
Option D is incorrect because only option C is correct.