If MC is greater than MR, a profit maximizing monopolist should:
A)calibrate all machinery.
B)hold output constant.
C)decrease output.
D)increase output.

Question

Quizplus · Accepted Answer

When MC is greater than MR, it means that the cost of producing an additional unit of output is higher than the revenue generated by that unit of output. In this situation, producing that additional unit of output would lead to a decrease in profit. Therefore, the profit maximizing monopolist should decrease output to the point where MC equals MR.

If MC Is Greater Than MR, a Profit Maximizing Monopolist