A profit maximizing monopolist faces the following information: P = $10, MR = $5, ATC = $6, MC = $5. The firm should
A)shut down.
B)decrease output.
C)increase output.
D)stay at its current level of output.

Question

Quizplus · Accepted Answer

For a profit maximizing monopolist, the optimal level of output is where marginal revenue equals marginal cost. Here, MR = $5 and MC = $5. Therefore, the monopolist is already producing at the optimal level of output. The firm should stay at its current level of output.

A Profit Maximizing Monopolist Faces the Following Information: P =