If a monopolist is producing a quantity that generates MC MR,then profit:
A)is maximized.
B)is maximized only if MC = P.
C)can be increased by increasing price.
D)can be increased by decreasing price.

Question

If a monopolist is producing a quantity that generates MC > MR,then profit:
A)is maximized.
B)is maximized only if MC = P.
C)can be increased by increasing price.
D)can be increased by decreasing price.

Quizplus · Accepted Answer

To increase profit when MC > MR, the monopolist should reduce output, which typically leads to an increase in price due to the inverse relationship between quantity supplied and price in monopolistic markets. This strategy increases MR to match or exceed MC, thus increasing profits.

If a Monopolist Is Producing a Quantity That Generates MC