A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $3, and MR = $4. We can conclude that
A) economic profit could be increased by producing more.
B) economic profit could be increased by producing less.
C) economic profit cannot be increased.
D) the firm is earning $10 in economic profits.

Question

Quizplus · Accepted Answer

Producing more would increase economic profit because the marginal revenue (MR = $4) is greater than the marginal cost (MC = $3), indicating that additional units produced add more to revenue than to cost.

A Monopolist Is Producing at an Output Level at Which