Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by
A) shutting down.
B) lowering its price and increasing its output.
C) raising its price and decreasing its output.
D) lowering its price and decreasing its output.

Question

Quizplus · Accepted Answer

When marginal revenue is less than marginal cost, the monopoly is producing too much. By raising its price and decreasing its output, it can reduce production to where marginal revenue equals marginal cost, maximizing profit.

Suppose That a Monopoly Is Currently Producing the Quantity at Which