The following question are based on the following diagram of a monopolist:

-If the monopolist is currently producing 0A and wants to maximize profits,it should
A) do nothing because it is maximizing profits.
B) decrease output to zero.
C) raise output to 0B.
D) raise output to 0C.
E) raise output above 0C.

Question

The following question are based on the following diagram of a monopolist:
 
-If the monopolist is currently producing 0A and wants to maximize profits,it should
A) do nothing because it is maximizing profits. 
B) decrease output to zero. 
C) raise output to 0B. 
D) raise output to 0C. 
E) raise output above 0C.

Quizplus · Accepted Answer

To maximize profits, a monopolist should produce at the quantity where marginal cost (MC) equals marginal revenue (MR). Without specific details on the cost and revenue curves, the general principle is to adjust output to the point where this equality occurs. If the current output is 0A and options are given for adjusting output, the correct choice involves moving to a point that aligns with typical economic theory on profit maximization, which suggests adjusting output to where MR=MC, implied by option C (raise output to 0B), assuming 0B represents this equilibrium point based on the context provided.

The Following Question Are Based on the Following Diagram of a Monopolist