-In the above figure, suppose the monopolist is producing at Q3. The firm should
A) increase output and decrease price.
B) decrease output and increase price.
C) not change output or price.
D) shut down.

Question

-In the above figure, suppose the monopolist is producing at Q3. The firm should
A) increase output and decrease price. 
B) decrease output and increase price. 
C) not change output or price. 
D) shut down.

Quizplus · Accepted Answer

At Q3, the monopolist is likely producing beyond the profit-maximizing quantity where marginal cost equals marginal revenue. To maximize profit, the firm should decrease output and increase price.

-In the Above Figure, Suppose the Monopolist Is Producing at Q3