When the marginal cost curve of the monopolist shifts upward, there will be
A) an increase in both price and quantity.
B) an increase in price but a decrease in quantity.
C) a decrease in price and in marginal revenue.
D) a decrease in quantity and a decrease in marginal revenue.

Question

Quizplus · Accepted Answer

When the marginal cost curve of the monopolist shifts upward, the monopolist will reduce the quantity produced, resulting in a decrease in quantity. However, because the monopolist has market power, they may increase the price to maintain their profit margin. This will lead to an increase in price but a decrease in quantity.

When the Marginal Cost Curve of the Monopolist Shifts Upward