Figure 7.2
-Figure 7.2 shows a monopolistʹs demand curve. Suppose that the marginal cost is $6 for all units and the current output level is 4 units. Then which of the following is true?
A)The marginal revenue is less than the marginal cost.
B)The price is greater than the average total cost.
C)The firm is producing the profit maximizing level of output.
D)all of the above

Question

Figure 7.2
-Figure 7.2 shows a monopolistʹs demand curve. Suppose that the marginal cost is $6 for all units and the current output level is 4 units. Then which of the following is true?
A)The marginal revenue is less than the marginal cost. 
B)The price is greater than the average total cost. 
C)The firm is producing the profit maximizing level of output. 
D)all of the above

Quizplus · Accepted Answer

The marginal revenue for a monopolist is less than the price, and since the price must be above marginal cost for profit maximization, at 4 units, marginal revenue is likely less than the constant marginal cost of $6.

Figure 7.2 -Figure 7.2 Shows a Monopolistʹs Demand Curve. Suppose That the That