Suppose a monopolist faces the demand curve and cost curves shown below. FIGURE 10- 4
-Refer to Figure 10- 4. Suppose this firm experiences an increase in the demand for its product. In the short run, this profit- maximizing monopolist will

Question

Suppose a monopolist faces the demand curve and cost curves shown below.  FIGURE 10- 4
-Refer to Figure 10- 4. Suppose this firm experiences an increase in the demand for its product. In the short run, this profit- maximizing monopolist will

Quizplus · Accepted Answer

When the demand for the product of a monopolist increases, it can increase both price and output to maximize profits. This is because the monopolist can sell at a higher price due to increased demand and also produce more to capture a larger market share. In this case, the monopolist can increase both price and output from their current levels to maximize profits in the short run. Thus, the correct answer is E.

Suppose a Monopolist Faces the Demand Curve and Cost Curves