Figure 15-4
-Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Question

Figure 15-4 
-Refer to Figure 15-4. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at

Quizplus · Accepted Answer

If the monopolist is currently operating at (i) or (ii), then increasing the level of output by one unit will result in an increase in profit. At (iii), the monopolist is operating where marginal revenue is less than marginal cost, which means increasing the level of output will result in a decrease in profit. Therefore, option (D) is not correct. Finally, at (iv), the monopolist is producing the profit-maximizing level of output, so increasing the level of output will not increase profit. Therefore, option (C) is not correct.

Figure 15-4 -Refer to Figure 15-4. Profit Can Always Be Increased by Be