If a monopolist finds that at the present level of output marginal revenue exceeds marginal cost, the firm should:
A) shut down.
B) expand output.
C) maintain the current output.
D) reduce output (but still produce).
E) raise prices.

Question

Quizplus · Accepted Answer

If marginal revenue exceeds marginal cost, then producing more units will increase profits. Therefore, the monopolist should expand output to maximize profits.

If a Monopolist Finds That at the Present Level of Output