Figure 7.2
-Figure 7.2 shows a monopolist's demand curve. Suppose that the marginal cost is $6 for all units and the current output level is 4 units. Then which of the following is TRUE?
A) The marginal revenue is less than the marginal cost.
B) The price is greater than the average total cost.
C) The firm is producing the profit maximizing level of output.
D) all of the above

Question

Figure 7.2
-Figure 7.2 shows a monopolist's demand curve. Suppose that the marginal cost is $6 for all units and the current output level is 4 units. Then which of the following is TRUE?
A) The marginal revenue is less than the marginal cost. 
B) The price is greater than the average total cost. 
C) The firm is producing the profit maximizing level of output. 
D) all of the above

Quizplus · Accepted Answer

In a monopoly, the marginal revenue is less than the price. If the marginal cost is $6 and the firm is producing 4 units, the marginal revenue must be less than $6 for the firm to be profit-maximizing. Therefore, the marginal revenue is less than the marginal cost.

Figure 7.2 -Figure 7.2 Shows a Monopolist's Demand Curve. Suppose That the That