In response to a rightward shift in the demand for a commodity,a monopoly firm that is producing at the profit-maximizing level of output will:
A)decrease price and output.
B)decrease output and increase price.
C)increase price but maintain the level of output.
D)increase output and price.

Question

Quizplus · Accepted Answer

A rightward shift in demand for a commodity indicates an increase in demand. For a monopoly firm producing at the profit-maximizing level of output, this increase in demand allows the firm to raise its price due to higher willingness to pay among consumers. Additionally, to meet the increased demand, the firm will also increase its output.

In Response to a Rightward Shift in the Demand for a Commodity,a