Suppose a monopolist's costs and revenues are as follows: ATC = $50.00; MC = $35.00; MR = $45.00; P = $55.00. The firm should
A) increase output and decrease price.
B) decrease output and increase price.
C) not change output or price.
D) shut down.

Question

Quizplus · Accepted Answer

The monopolist should increase output because marginal revenue (MR) is greater than marginal cost (MC), indicating that producing more will increase profit. The price can be decreased to sell the additional output.

Suppose a Monopolist's Costs and Revenues Are as Follows: ATC