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If a monopolist's price is $50 per unit and its marginal cost is $25, then A) to maximize profit the firm should increase output.

Sagot :

Tundexiidn

Answer:

a. to maximize profit the firm should decrease output

Explanation:

Options are "A. to maximize profit the firm should decrease output. B. to maximize profit the firm should increase output. C. to maximize profit the firm should continue to produce the output it is producing"

Monopoly profit maximization occurs where Marginal revenue = Marginal cost.

Here, Marginal revenue ($50) > Marginal cost ($25). So, in order to maximize profit, the firm has to decrease the output because cost is very lower and revenue is very high.

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