Suppose a monopolist is currently producing at a point where marginal revenue is $20 and marginal cost is $25. This monopolist should:

Question

Quizplus · Accepted Answer

Since the marginal cost is higher than the marginal revenue, the firm is not maximizing profits at its current level of production. Therefore, it should decrease its output to increase its profits. This is because producing less output will reduce costs and increase the price of the goods, which will result in a higher profit margin.

Suppose a Monopolist Is Currently Producing at a Point Where