Assume that at a given output a monopolist's marginal revenue is $25 and its marginal cost is $18.If the monopolist increases output,then
A)price,marginal cost,and total profit will fall.
B)price will fall,marginal cost will rise,and total profit will rise.
C)price will rise,marginal cost will fall,and total profit will rise.
D)price,marginal cost,and total profit will rise.

Question

Quizplus · Accepted Answer

When a monopolist increases output, the price typically falls due to the downward-sloping demand curve. Marginal cost rises because of increasing costs at higher levels of production. Total profit rises as long as marginal revenue exceeds marginal cost, which is the case here ($25 > $18).

Assume That at a Given Output a Monopolist's Marginal Revenue