A profit maximizing monopolist faces the following information: P = $10, MR = $5, ATC = $6, MC = $5.The firm should
A)Shut down
B)Decrease output
C)Increase output
D)Stay at its current level of output

Question

Quizplus · Accepted Answer

The monopolist is maximizing profit where MR = MC. Since MR = MC = $5, the firm is at the profit-maximizing output level. Additionally, since P > ATC, the firm is making a profit and should continue operating at the current output level.

A Profit Maximizing Monopolist Faces the Following Information: P =