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

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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