Under which of the following conditions would a profit-maximizing monopolist necessarily raise price?
A) if product demand was price-elastic
B) if marginal revenue is positive
C) if marginal revenue was greater than marginal cost
D) if marginal cost was greater than marginal revenue

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will always produce up to the point where marginal revenue equals marginal cost. If the monopolist is facing a situation where marginal cost is greater than marginal revenue (MC > MR), then they cannot profitably produce any additional units of output, and it would be rational to reduce output or increase price in order to maximize profits. Therefore, the monopolist would necessarily raise price in this situation.

Under Which of the Following Conditions Would a Profit-Maximizing Monopolist