If a monopolist is producing the quantity at which marginal revenue equals marginal cost, it should
A) continue to produce this amount if it wants to maximize profits.
B) reduce output if it wants to maximize profits.
C) increase price and keep output unchanged if it wants to maximize profits.
D) increase output if it wants to maximize profits.

Question

Quizplus · Accepted Answer

When a monopolist produces at the level at which marginal revenue equals marginal cost, it is operating at the point of profit maximization. This is because at this level, the additional revenue gained from producing one more unit (marginal revenue) is equal to the additional cost of producing that unit (marginal cost). Therefore, continuing to produce at this level will maximize profits by achieving the highest possible level of output while minimizing costs. So, choice A is the best option.

If a Monopolist Is Producing the Quantity at Which Marginal