At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve is upward sloping, what can we conclude about the monopolist?
A) It could increase profit by increasing his price.
B) It is producing at the profit-maximizing level of output.
C) It should exit the market if significant fixed costs have been incurred.
D) It could increase profit by increasing output.

Question

Quizplus · Accepted Answer

The monopolist can increase profit by increasing output because MR ($10) is greater than MC ($6), indicating that producing more would add more to revenue than to cost.

At His Current Level of Output, a Monopolist Has an MR