Exhibit 9-7 Monopolist

-According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $6, what would you advise Rudd to do?

Question

Exhibit 9-7 Monopolist
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-According to the information provided in Exhibit 9-7, if the Rudd Ice Company was a monopoly and is currently charging a price of $6, what would you advise Rudd to do?

Quizplus · Accepted Answer

Based on the information provided in Exhibit 9-7, the monopolist is currently producing where marginal cost (MC) equals marginal revenue (MR) at a quantity of 20 units and a price of $6. However, at this point, the marginal cost is less than the average revenue, which means there is room for profit maximization. To achieve profit maximization, the monopolist should increase the price and decrease the output. Therefore, based on the options given, the best choice would be to increase the price and decrease output (choice B).

Exhibit 9-7 Monopolist ​

Exhibit 9-7 Monopolist