If a monopolist produces a quantity that generates MC < MR, then profit:Question 6Answera.can be increased by decreasing output.b.is maximized only if MC = P.c.is maximized.d.can be increased by increasing output.
Question
If a monopolist produces a quantity that generates MC < MR, then profit:Question 6Answera.can be increased by decreasing output.b.is maximized only if MC = P.c.is maximized.d.can be increased by increasing output.
Solution
The answer is d. Profit can be increased by increasing output.
Here's why:
In a monopoly, the monopolist is the only seller in the market, and they have the power to control the quantity of goods or services produced. The monopolist's goal is to maximize profit.
Profit maximization occurs where marginal cost (MC) equals marginal revenue (MR). This is because the marginal cost is the cost of producing one more unit of a good, and the marginal revenue is the additional revenue from selling one more unit of a good.
If the marginal cost is less than the marginal revenue (MC < MR), this means that the cost of producing an additional unit of output is less than the revenue gained from selling that additional unit. Therefore, by increasing output, the monopolist can increase profit.
So, if a monopolist produces a quantity that generates MC < MR, then profit can be increased by increasing output.
Similar Questions
If MR > MC, the monopolist should: MR = Marginal RevenueMC = Marginal CostGroup of answer choicesdecrease production.increase production.maintain the same level of production.stop producing.
he algebraic expression MR=MC suggests thatGroup of answer choicesmarginal profit is decreasing.marginal profit is increasing.marginal profit is maximum.marginal profit is zero.
Suppose that at the current output level the price received by a monopolist for its good is $10, marginal revenue is equal to $6, and marginal cost is $8. To maximise profit the monopolist should: A. decrease output B. increase output C. keep output constant D. we cannot say without more information
The profit maximising output of a competitive firm is given as, MR=MC. This may also be written as;Group of answer choicesP=ACP=MCMR=PMR=AC
A monopoly firm faces a typical downward-sloping demand (D) curve, a corresponding downward-sloping marginal revenue (MR) curve below the demand curve, and an upward-sloping marginal cost (MC) curve. It currently produces at an output level of 100,000 units, where marginal revenue (MR) is $25, and marginal cost (MC) is $40. (a) (i) Write the profit-maximising rule for determining the level of output and price charged by the monopolist. (3 marks) (ii) Explain the economic reasoning for this profit maximisation rule, and evaluate which market structures this rule applied to, and why.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.