Question

a. A monopolist finds that at its current level of output the marginal cost of production...

a. A monopolist finds that at its current level of output the marginal cost of production is $9, the average total cost is $9.95,the average variable cost is $9.75 and its marginal revenue is $9.45. What would you recommend that the monopolist do to increase profits? One word answer is not enough. Explain.

b.  A monopolist determines that at the current level of output the marginal revenue is $9.00 and its marginal cost is $10. What should the monopolist do to increase profits? One word answer is not enough. Explain.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

1.The monopolist should increase production.As production rises MR falls and MC rises.Production should occur until the point at which MR=MC is achieved.

2.In theis case the MC>MR.If the monopolist reduces production then MC falls and MR rises.

Monopolist should reduce production.

Add a comment
Know the answer?
Add Answer to:
a. A monopolist finds that at its current level of output the marginal cost of production...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • A certain monopolist has a positive marginal cost of production. Despite this fact, the monopolist decides...

    A certain monopolist has a positive marginal cost of production. Despite this fact, the monopolist decides to produce a quantity of output that maximizes total revenues. Assume that the marginal revenue curve for this monopolist always has a negative slope. Then the monopolist Group of answer choices is minimizing its profits. produces less output than it would if it maximized profits. produces the same output that it would if it maximized profits. produces an output where marginal revenue is strictly...

  • At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price...

    At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price is less than its average cost. Therefore, it should: A. Increase output until MR = 0 B. Increase its price C. Decrease output until MR = MC D. Shutdown Immediately E. Increase output until MR = MC

  • 1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13,...

    1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...

  • At a firm's current level of production, marginal revenue is less than marginal cost (MR<MC). A...

    At a firm's current level of production, marginal revenue is less than marginal cost (MR<MC). A profit- maximizing firm will decrease prices. increase output O decrease output. shut down.

  • Below are two different cases. In each case, the monopolist wants to maximize its profits or...

    Below are two different cases. In each case, the monopolist wants to maximize its profits or minimize its losses. Analyze each case and give a recommendation as to what the monopolist should do based on the possible recommendations provided below. Explain how you reached this recommendation and the reasons for it. Possible Recommendations: a. Increase production and reduce the price. b. Decrease production and raise the price. c. Shut down. d. The monopoly is currently at the correct position. CASE...

  • Below are two different cases. In each case, the monopolist wants to maximize its profits or...

    Below are two different cases. In each case, the monopolist wants to maximize its profits or minimize its losses. Analyze each case and give a recommendation as to what the monopolist should do based on the possible recommendations provided below. Explain how you reached this recommendation and the reasons for it. Possible Recommendations: a. Increase production and reduce the price. b. Decrease production and raise the price. c. Shut down. d. The monopoly is currently at the correct position. CASE...

  • Say a monopolist knew that at the current price for its product demand is inelastic. If...

    Say a monopolist knew that at the current price for its product demand is inelastic. If marginal costs for this firm are zero, then in order to maximize profits this monopolist should A increase output. reduce output. keep output at the same level. D decrease its price.

  • A monopolist can produce any level of output at a constant marginal cost of $5 per...

    A monopolist can produce any level of output at a constant marginal cost of $5 per unit. Assume the monopoly sells its goods in two different markets separated by some distance. The demand curve in the first market is given by q1 = 65 − p1,and the demand curve in the second market is given by q2 = 90 − 2p2. (a) If the monopolist can maintain the separation between the two markets, what level of output should be produced...

  • At a firm's current level of production, marginal revenue is greater than marginal cost (MR>MC).A profit-maximizing...

    At a firm's current level of production, marginal revenue is greater than marginal cost (MR>MC).A profit-maximizing firm will increase prices. increase output decrease output. O shut down.

  • Monopolies supply a level of output where their marginal cost equals their marginal revenue. If a...

    Monopolies supply a level of output where their marginal cost equals their marginal revenue. If a pandemic somehow increases their cost of production (including marginal costs), what will happen to their level of output, profit level, and deadweight loss to society? Word limit is 50-150 words.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT