A decrease in the marginal cost of a monopoly firm would _______ quantity and _______ price.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

A decrease in the marginal cost for a monopoly firm would lead to an increase in the quantity produced, as it becomes cheaper for the firm to produce additional units. This would also lead to a decrease in price, as the lower cost allows the firm to offer its product at a lower price while still maintaining profitability.

A Decrease in the Marginal Cost of a Monopoly Firm