Question

Which of the following statements is correct? a. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. b. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. c. If the monopolist is earning a positive economic profit, it must be producing where MR equals MC. d. When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit.

Answer 1

Answer:If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit.

Explanation:

If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. In the case of higher MR , the maximum profit will come about at the level of where MR is equal to the MC. So in this case to increase the profit, MR i,e, also the price can be lower to the level of MC to sell more commodity and earn higher profits.