ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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will be earning profit
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will be earning loss
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can improve its profit by reducing its price
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can improve its profits by raising its price
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Detailed explanation-1: -A monopolist can determine its profit-maximizing price and quantity by analyzing the marginal revenue and marginal costs of producing an extra unit. If the marginal revenue exceeds the marginal cost, then the firm should produce the extra unit.
Detailed explanation-2: -When a single-price monopolist maximizes profits, price is greater than marginal cost. In other words, buyers are willing to pay more for additional units of output than the units cost to produce.
Detailed explanation-3: -If marginal revenue is greater than the marginal cost, the firm can increase its profit by increasing output.
Detailed explanation-4: -1. If marginal revenue is greater than marginal cost, the monopolist should increase output. 2. If marginal revenue is less than marginal cost, the monopolist should decrease output.
Detailed explanation-5: -If marginal cost is greater than marginal revenue, the firm should decrease its output.