Asked by Nicole Hoskins on Jun 29, 2024
Verified
Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost. We can conclude that the:
A) firm is maximizing profit.
B) firm's output is smaller than the profit maximizing quantity.
C) firm's output is larger than the profit maximizing quantity.
D) firm's output does not maximize profit, but we cannot conclude whether the output is too large or too small.
Marginal Revenue
The additional income from selling one more unit of a good; sometimes equals the price of the good.
Marginal Cost
The additional cost incurred from manufacturing or producing one more unit of a specific product or service.
Profit Maximizing
A financial strategy or goal of businesses to achieve the highest possible profit, where marginal revenue equals marginal cost.
- Ascertain the situations prompting a monopolist to elevate, diminish, or keep constant their current output volumes for the purpose of profit optimization.
Verified Answer
TN
Trang NguyenJul 05, 2024
Final Answer :
B
Explanation :
When marginal revenue exceeds marginal cost, the firm can increase its profit by producing more. Therefore, its current output is smaller than the profit-maximizing quantity.
Learning Objectives
- Ascertain the situations prompting a monopolist to elevate, diminish, or keep constant their current output volumes for the purpose of profit optimization.