Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer? A)Yes,MR MC,so it should provide service to the additional customer. B)Yes,MR is equal to the number of customers,so it should provide service to the additional customer. C)No,MR MC,so it should not provide service to the additional customer. D)No,MC is less than the number of customers,so it should not provide service to the additional customer.

Question

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer? A)Yes,MR > MC,so it should provide service to the additional customer. B)Yes,MR is equal to the number of customers,so it should provide service to the additional customer. C)No,MR > MC,so it should not provide service to the additional customer. D)No,MC is less than the number of customers,so it should not provide service to the additional customer.

Quizplus · Accepted Answer

The company should provide service to the 11th customer because the marginal revenue (MR) of serving that customer is greater than the marginal cost (MC) of serving them. The MR is $10, which is greater than the MC of $5. Therefore, the company can increase its profits by serving the additional customer.

Currently,a Monopolist's MR = $10 and Its MC = $5