If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should

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Business

Keely Miller

25 March, 14:34

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should

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Virginia Daugherty · Answer 1

The monopolist can reduce the production of the goods and increase price to improve profits.

In this situation, the monopolist is making a loss. However, since they have a monopoly in the market, i. e. they are the only producers of a product without any competition, they can reduce the supply of the goods and increase the price.

Since no one else is producing what they are, consumers would eventually have to pay higher prices.