If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50, it will increase its profits by

Question

Quizplus · Accepted Answer

When the marginal revenue is less than the marginal cost, it means that producing an additional unit of output reduces the monopolist's profit. Therefore, to increase profits, the monopolist should reduce output and raise the price, which will increase the marginal revenue. This choice will allow the monopolist to produce at a lower cost, and the increased price will compensate for the lower output.

If a Monopolist's Marginal Revenue Is $3