A monopoly firm is charging the price the market will bear at a level of output where MC equals $6 and is increasing,MR equals $9,and average variable cost equals $5.To maximize profits,the firm should:

Question

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To maximize profits, a monopoly should produce where MR = MC. Since MR ($9) is greater than MC ($6), the firm should increase output. Increasing output typically requires lowering the price in a monopoly setting to sell the additional units.

A Monopoly Firm Is Charging the Price the Market Will