Narrbegin Exhibit 8.6 Monopolist
-According to the information provided in Exhibit 8.6, if the Rudd Ice Company is a monopoly and is currently charging a price of $8, what would you advise Rudd to do?
A) Stay where he is currently operating because he is charging the profit-maximising price.
B) Increase price and increase output.
C) Decrease price and increase output.
D) Increase output and hold price constant.

Question

Narrbegin Exhibit 8.6 Monopolist  
-According to the information provided in Exhibit 8.6, if the Rudd Ice Company is a monopoly and is currently charging a price of $8, what would you advise Rudd to do?
A) Stay where he is currently operating because he is charging the profit-maximising price. 
B) Increase price and increase output. 
C) Decrease price and increase output. 
D) Increase output and hold price constant.

Quizplus · Accepted Answer

A monopoly is a market structure in which there is only one seller of a good or service. As a result, the monopoly has the power to set the price of the good or service. The profit-maximizing price is the price at which the monopoly earns the highest possible profit. In this case, Rudd Ice Company is a monopoly and is currently charging a price of $8. This is the profit-maximizing price, so Rudd should stay where he is currently operating.