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A Monopolist Produces 14,000 Units of Output and Charges $14

Question 2

Multiple Choice

A monopolist produces 14,000 units of output and charges $14 per unit. Its marginal revenue is $8, its marginal cost is $7 and rising, its average total cost is $10, and its average variable cost is $9. The monopolist should


A) increase output, which will result in an increase in the firm's positive economic profit.
B) increase output, which will reduce the firm's economic losses.
C) shut down, which will reduce the firm's economic losses.
D) decrease output, which will result in an increase in the firm's positive economic profit.

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