At His Current Level of Output, a Monopolist Has an MR

question 109

Multiple Choice

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist

• A) is producing his profit-maximizing level of output.
• B) could increase his profit by increasing his output.
• C) could increase his profit by increasing his price.
• D) should exit the market if he has positive fixed cost.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the marketplace, determined by supply and demand dynamics.

Oligopolistic Market

A market structure characterized by a small number of large firms dominating the industry, with significant barriers to entry for new competitors.

Price Wars

A competitive situation in which retailers and manufacturers continuously reduce prices to outdo each other, often resulting in minimal profits.

Comparative Advertising

A marketing strategy where a brand's product or service is directly compared to a competitor's to highlight its superiority.