Currently a monopolist's MR = $5 and its MC = $10 and it services 10 consumers. An 11^th consumer walks in. Should the company service her? A) Yes, MR MC, so it should service her. B) Yes, MR MC, so it should not service her. D) No, MR

Question

Currently a monopolist's MR = $5 and its MC = $10 and it services 10 consumers. An 11^th consumer walks in. Should the company service her? A) Yes, MR > MC, so it should service her. B) Yes, MR < MC, so it should service her. C) No, MR > MC, so it should not service her. D) No, MR < MC, so it should not service her.

Quizplus · Accepted Answer

The company should not service the 11th consumer as MR ($5) is less than MC ($10), which means that the cost of producing an additional unit is higher than the revenue earned from it. Therefore, serving the 11th consumer would lead to a loss for the monopolist.

Currently a Monopolist's MR = $5 and Its MC =