A single-price monopoly is producing at an output level where marginal revenue is $15,marginal cost is $13,and price is $20.This monopoly is
A) not maximizing its profit and should decrease output to increase its profit.
B) not maximizing its profit and should increase output to increase its profit.
C) maximizing its profit but should shut down.
D) maximizing its profit and should not shut down.
E) maximizing its profit but still should decrease output to earn even more profit.

Question

Quizplus · Accepted Answer

In a profit-maximizing scenario, a firm should continue to produce as long as marginal revenue (MR) exceeds marginal cost (MC). Since MR ($15) is greater than MC ($13), the monopoly can increase its profit by producing more, not less.

A Single-Price Monopoly Is Producing at an Output Level Where