Suppose a Monopolist Is at the Profit-Maximizing Output Level

question 101

Multiple Choice

Suppose a monopolist is at the profit-maximizing output level. If the monopolist reduces output:

• A) both producer surplus and consumer surplus increase.
• B) producer surplus falls but consumer surplus rises.
• C) both producer surplus and consumer surplus decrease.
• D) producer surplus rises but consumer surplus falls.

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Definitions:

Duty

An obligation or responsibility legally or morally bound upon an individual, organization, or entity.

Discretion

The freedom to decide what should be done in a particular situation, often involving judgment and choice.

Notify

To formally or officially inform someone about a fact, situation, or requirement.

Subject of Agency

The entity or matter that is represented or acted upon by an agent, within the context of a legal or business relationship.