At its current production level, a monopolist's marginal revenue is $20 and its marginal cost is $10. Which of the following is correct?
A) The monopolist should produce and sell more output.
B) The monopolist should produce and sell less output.
C) The monopolist is maximizing its profits at its current level of output.
D) The monopolist should cease production.

Question

Quizplus · Accepted Answer

When marginal revenue exceeds marginal cost, increasing production will increase profits, suggesting the monopolist should produce more.

At Its Current Production Level, a Monopolist's Marginal Revenue Is