Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm
A) could increase profits by reducing output.
B) could increase profits by increasing output.
C) is maximizing profits.
D) must be earning zero profit.

Question

Quizplus · Accepted Answer

In a situation where marginal revenue (MR) is greater than marginal cost (MC), a firm can increase its profits by producing more. This is because each additional unit produced adds more to revenue than it does to costs, thereby increasing overall profit.

Verizon Has a Monopoly Over Local Telephone Service