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Author Question: If a profit-maximizing monopolist finds that marginal cost is increasing and exceeds marginal ... (Read 123 times)

storky111

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on: Jun 30, 2018
If a profit-maximizing monopolist finds that marginal cost is increasing and exceeds marginal revenue, it should:
 a. increase output and decrease price.
  b. increase price and decrease output.
  c. decrease both price and output.
 d. increase both price and output.

Question 2

How is the optimal level of input usage to produce a certain output identified with the help of isocosts and isoquants?


juwms

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Reply #1 on: Jun 30, 2018
Answer to Question 1

b

Answer to Question 2

Let us assume a firm wants to produce 15,000 units of a good annually. The least-cost combination of inputs can be obtained from the point of tangency between the isoquant depicting an annual output of 15,000 units and the lowest isocost line achievable for this level of production.


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