Tower Communications,Inc.has a monopoly over local cellphone service.If Tower Communications,Inc.is producing where marginal revenue is greater than marginal cost,the firm
A) could increase profits by reducing output.
B) could increase profits by increasing output.
C) is maximizing profits.
D) must be earning a zero profit.

Question

Quizplus · Accepted Answer

If marginal revenue is greater than marginal cost, then the firm should increase output to maximize profits. Therefore, Tower Communications, Inc. could increase profits by increasing output.