Figure 14-3
-Refer to Figure 14-3.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to
A) remain unchanged.
B) decrease.
C) increase as long as the new level of output is at least Q2.
D) increase as long as the new level of output is at least Q1.

Question

Figure 14-3 
-Refer to Figure 14-3.If the monopoly firm is currently producing Q3 units of output,then a decrease in output will necessarily cause profit to
A) remain unchanged. 
B) decrease. 
C) increase as long as the new level of output is at least Q2. 
D) increase as long as the new level of output is at least Q1.

Quizplus · Accepted Answer

A decrease in output from Q3 to at least Q2 will increase profit because the firm will be moving towards the profit-maximizing level of output where marginal cost equals marginal revenue.

Figure 14-3 -Refer to Figure 14-3.If the Monopoly Firm Is Currently Producing