Consider the following cost information for a monopolist: its MR
= $15, its MC = $23, and it is producing 9 units of output.Which
Of the following statements is correct?
A)The monopolist should produce and sell 9 units of output.
B)The monopolist should increase production of output.
C)We need more information to decide if the firm needs to produce.
D)The monopolist should not produce this output because MR

Question

Consider the following cost information for a monopolist: its MR
= $15, its MC = $23, and it is producing 9 units of output.Which
Of the following statements is correct?
A)The monopolist should produce and sell 9 units of output.
B)The monopolist should increase production of output.
C)We need more information to decide if the firm needs to produce.
D)The monopolist should not produce this output because MR < MC.

Quizplus · Accepted Answer

The monopolist should not produce this output because MR < MC. At the current level of production, the marginal revenue earned from selling the 9th unit is less than its marginal cost of production. This means that the firm is not maximizing its profits and should reduce its output to the point where MR = MC.

Consider the Following Cost Information for a Monopolist: Its MR