A monopolist facing a downward-sloping demand curve finds that his marginal cost is constant at $10 and his marginal revenue is zero.This monopolist should
A) reduce production.
B) increase production.
C) leave production unchanged.
D) reduce the production cost further.
E) decrease price.

Question

Quizplus · Accepted Answer

When marginal revenue is zero, the monopolist is producing at a level where any additional unit would not increase total revenue. Since marginal cost is constant and positive, reducing production would increase profit by reducing the cost of producing units that do not add to revenue.

A Monopolist Facing a Downward-Sloping Demand Curve Finds That His