A Profit-Maximizing Monopolist Is Selling 20,000 Units of Output at $1,400

question 71

Multiple Choice

A profit-maximizing monopolist is selling 20,000 units of output at $1,400 per unit. The marginal cost of production is constant at $600. What happens if marginal cost rises to $680?

• A) The monopolist will increase the price by less than $80 and sell fewer than 20,000 units of output.
• B) The monopolist will increase the price to $1,480 and sell 20,000 units of output.
• C) Because the monopolist is already maximizing profit, the increase in marginal cost will have no effect on the price or quantity produced.
• D) The monopolist will keep the price unchanged but sell more than 20,000 units of output to make up for higher costs of production.

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