If the marginal cost curve shifts upward, a profit-maximizing, nondiscriminating monopolist is likely to respond in the short run by
A)raising price and increasing output
B)raising price and decreasing output
C)keeping price constant and increasing output
D)reducing price and increasing output
E)shutting down

Question

Quizplus · Accepted Answer

If the marginal cost curve shifts upward, the monopolist's profit-maximizing point will shift leftward and upward along the demand curve. To maximize profits, the monopolist will decrease output and raise the price, as this will reduce the costs of producing an additional unit while also setting a higher price that consumers are willing to pay.  Therefore, the best choice is B, which states that the monopolist will raise price and decrease output in response to an upward shift in the marginal cost curve.

If the Marginal Cost Curve Shifts Upward, a Profit-Maximizing, Nondiscriminating