If a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then
A)to maximise profit the firm should increase output.
B)to maximise profit the firm should decrease output.
C)to maximise profit the firm should continue to produce the output it is producing.
D)Not enough information is given to say what the firm should do to maximise profit.

Question

Quizplus · Accepted Answer

If the monopolist's marginal revenue is equal to its marginal cost, it is already producing the profit-maximising level of output. This is because any additional unit of output would have a marginal cost higher than its marginal revenue, which would decrease the total profit. Therefore, the firm should continue to produce the same output in order to maximise profit.

If a Monopolist's Marginal Revenue Is $25 a Unit and Its