At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist
A) is producing his profit-maximizing level of output.
B) could increase his profit by increasing his output.
C) could increase his profit by increasing his price.
D) should exit the market if he has positive fixed cost.

Question

Quizplus · Accepted Answer

The monopolist can increase profit by increasing output because MR > MC, indicating that producing more will add more to revenue than to cost.

At His Current Level of Output, a Monopolist Has an MR