If a monopolist is producing the quantity at which marginal revenue exceeds marginal cost, it should
A) continue to produce this amount if it wants to maximize profits.
B) reduce output if it wants to maximize profits.
C) reduce price and keep output unchanged if it wants to maximize profits.
D) increase output if it wants to maximize profits.

Question

Quizplus · Accepted Answer

To maximize profits, a monopolist should produce at the quantity where marginal revenue equals marginal cost. If marginal revenue exceeds marginal cost, increasing output will increase profits until MR equals MC.

If a Monopolist Is Producing the Quantity at Which Marginal