Question #49402

If a profit maximizing monopolist is producing such that marginal cost is $10 and its marginal revenue is $4, it will increase its profits by:
reducing price and increasing output
increasing price and reducing output
reducing both price and output
increasing both price and output
raising price while keeping output unchanged

Expert's answer

If a profit maximizing monopolist is producing such that marginal cost is $10 and its marginal revenue is $4, it will increase its profits by increasing price and reducing output to reach the point, where MR = MC.

So, the right answer is b) increasing price and reducing output.

So, the right answer is b) increasing price and reducing output.

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