If a Monopolist Is Producing the Quantity at Which Marginal

question 148

Multiple Choice

If a monopolist is producing the quantity at which marginal revenue equals 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) increase 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:

Substitute Goods

Products or services that can be used in place of each other. When the price of one falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.

Consumer Behavior

The analysis of how consumers' preferences and economic decisions affect the demand for goods and services.

Marginal Utility

The change in total utility a person derives from consuming an additional unit of a good or service.

Total Utility

The overall satisfaction or benefit a person receives from consuming a certain amount of goods or services.