According to the marginal principle, a monopolist should increase output if marginal cost exceeds marginal revenue.

Question

Quizplus · Accepted Answer

The statement is incorrect. According to the marginal principle, a monopolist should decrease output if marginal cost exceeds marginal revenue, as this would result in decreasing profits. The monopolist should continue to increase output until marginal revenue is equal to marginal cost, as this would result in maximizing profits.

According to the Marginal Principle, a Monopolist Should Increase Output