Figure 15-4
-Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to
A)remain unchanged.
B)decrease.
C)increase as long as the new level of output is at least Q2.
D)None of the above is correct. The monopolist currently maximizing profits at Q4.

Question

Figure 15-4 
-Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to
A)remain unchanged. 
B)decrease. 
C)increase as long as the new level of output is at least Q2. 
D)None of the above is correct. The monopolist currently maximizing profits at Q4.

Quizplus · Accepted Answer

If the monopoly firm is producing Q4 units, a decrease in output will increase profit as long as the new level of output is at least Q2, because the firm is likely producing beyond the profit-maximizing quantity where marginal cost equals marginal revenue.

Figure 15-4 -Refer to Figure 15-4. If the Monopoly Firm Is Currently