An Unregulated Monopoly Finds That Its Marginal Cost Exceeds Its

question 138

Multiple Choice

An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In order to increase its profit, the firm will

• A) raise its price and decrease its output.
• B) lower its price and increase its output.
• C) raise its price and increase its output.
• D) continue to produce this level of output because any change will lower its profit.

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Definitions:

Food

Any nutritious substance that people or animals eat or drink in order to maintain life and growth.

Budget Constraint

A concept in economics that represents all the combinations of goods and services a consumer can afford given their income level and the prices of goods.

Good X

Good X typically represents a hypothetical product used in economic models and problems to explain various concepts.

Good Y

Refers to a specific product or commodity in an economic model or discussion, distinct from others by its characteristics or use case.