To maximize profit, the monopolist increases output:

Question

Quizplus · Accepted Answer

The monopolist maximizes profit by producing the quantity where marginal cost is equal to marginal revenue. This is because at this output level, the last unit produced adds as much to revenue as it does to cost, so there is no further gain in profit from producing more or less. Therefore, the profit-maximizing output level for a monopolist is not necessarily full manufacturing capacity, but rather the quantity at which marginal cost equals marginal revenue.

To Maximize Profit, the Monopolist Increases Output