Which of the following terms is NOT utilized by monopolists in determining how to maximize profit?

• A. Perfect Competition Price
• B. Average Total Cost
• C. Marginal Revenue
• D. Marginal Cost

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the context of the problem. The question asks which term is NOT used by monopolists when determining how to maximize profit. This means we need to identify concepts relevant to monopolist pricing and output decisions.
2. Step 2: Recall that monopolists maximize profit by producing the quantity where Marginal Revenue (MR) equals Marginal Cost (MC). So, both Marginal Revenue and Marginal Cost are essential terms for monopolists.
3. Step 3: Recognize that Average Total Cost (ATC) is also important because it helps determine the monopolist's profit or loss at the chosen output level by comparing price to ATC.
4. Step 4: Understand that the Perfect Competition Price is a market price determined under perfect competition, where firms are price takers. Monopolists do not use this price because they are price makers and set their own prices based on demand and marginal revenue.
5. Step 5: Conclude that the term 'Perfect Competition Price' is NOT utilized by monopolists in their profit-maximizing decisions, unlike Marginal Revenue, Marginal Cost, and Average Total Cost.