question archive If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should _____ to maximize profits
If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should _____ to maximize profits
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If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should _____ to maximize profits.
a. Increase production and lower the price,
b. Decrease production and increase the price,
c. Continue producing at the current price,
d. Increase production and increase the price,
e. Decrease production and decrease the price.
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c. Continue producing at the current price
It is because, the profit will achieve maximizing condition where the two variables, namely, marginal cost and marginal revenue become same or equal. Increasing or decreasing either the output or price will reduce the profit.
