Suppose that a monopolist calculates that at present output and sales,marginal cost is $1.00 and marginal revenue is $2.00.He could maximize profits by:

Question

Quizplus · Accepted Answer

The monopolist is currently producing at a point where marginal revenue is greater than marginal cost ($2 > $1). This means that the monopolist can increase profits by producing more, as each additional unit sold will bring in more revenue than the cost to produce it. Therefore, the best choice is to increase output and decrease price, which will still allow the firm to earn a profit while also increasing market share and potentially reducing the threat of competitors entering the market.

Suppose That a Monopolist Calculates That at Present Output and Sales,marginal