Asked by
Gangadhar Chowdary
on Dec 12, 2024
Verified
A monopolist earning short-run economic profit determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?
A) Raise price and lower output.
B) Lower price and lower output.
C) Raise price and raise output.
D) Lower price and raise output.
E) Lower output but leave price unchanged.
Economic Profit
The total revenue of a firm minus its explicit and implicit costs, representing the surplus generated beyond the opportunity cost.
Marginal Revenue
The increase in earnings from the sale of one additional unit of a good or service.
- Familiarize oneself with the procedures for setting prices and optimizing profit margins in markets characterized by a monopoly.
- Discern the role and implications of marginal revenue and marginal cost on pricing and output determinations in monopolistic markets.
Verified Answer
SD
Learning Objectives
- Familiarize oneself with the procedures for setting prices and optimizing profit margins in markets characterized by a monopoly.
- Discern the role and implications of marginal revenue and marginal cost on pricing and output determinations in monopolistic markets.