At an output level of 100,a monopolist faces MC = 15 and MR = 17.At output level q = 101,the monopolist's MC = 16 and MR = 15.To maximize profits,the firm
A) should produce 100 units.
B) should produce 101 units.
C) cannot maximize profits.
D) is not a monopoly.

Question

Quizplus · Accepted Answer

To maximize profits, a monopolist should produce at a level where MR = MC. At output level 100, MR = 17 which is greater than MC = 15. At output level 101, MR is less than MC, so the firm should not produce at that level. Therefore, producing 100 units maximizes the monopolist's profits.

At an Output Level of 100,a Monopolist Faces MC =