Answer to Question #211178 in Economics for akky

Question

Suppose a monopolist is producing a level of output such that MR>MC. What should the firm do to maximize its profits?

A) The firm should increase output.

B) The firm should do nothing it wants to maximize the difference between MR and MC in order to maximize its profits.

C) The firm should increase price.

D) The firm should hire less labor.

Answer 1

If a monopolist is producing a level of output such that MR>MC, then to maximize its profits the firm should produce more to get MR = MC.

So, the correct answer is A.