If a monopolist's marginal costs increase by $1 for all levels of output, then the monopoly price will
A)rise by $1.
B)rise by more than $1.
C)rise by less than $1.
D)not change, but profits will decrease.

Question

Quizplus · Accepted Answer

When a monopolist's marginal costs increase, the firm will adjust its output to where marginal cost equals marginal revenue. This typically results in a higher price, but the increase in price is usually less than the increase in marginal cost due to the downward-sloping demand curve.

If a Monopolist's Marginal Costs Increase by $1 for All