If a Monopolist Is Producing the Quantity at Which Marginal

question 32

Multiple Choice

If a monopolist is producing the quantity at which marginal revenue exceeds marginal cost, it should

• A) continue to produce this amount if it wants to maximize profits.
• B) reduce output if it wants to maximize profits.
• C) reduce price and keep output unchanged if it wants to maximize profits.
• D) increase output if it wants to maximize profits.

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Definitions:

Investment Income

Earnings from assets acquired, such as dividends on shares or interest on bonds.

Equity Method

An accounting technique used to record investments in other companies, where the investment is significant but not controlling.

Stock Investments Account

An account used to record the purchases and sales of equity securities, such as shares of stock, that a company holds as investments.

Annually

Occurring once every year or relating to a period of one year.