Based on your calculation above, at what point do you think the monopolist would not increase production

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BlackTom AI · Accepted Answer

We start by carefully considering what the question asks: at what production level would a monopolist decide not to increase output further, given the calculation performed earlier. The core concept here is that a profit‑maximizing monopolist extends production only as long as marginal revenue from selling an additional unit exceeds marginal cost, and stops when marginal revenue equals marginal cost (MR = MC). When MR < MC, producing one more unit would lower profit, so production should not increase; when MR > MC, producing more raises profit. Options: 8, 7, 6, 5. - Option 8: If the decision criterion were to continue increasing output, that would imply MR > MC at 8. If the calculation showed MR at 8 is still greater than MC, the monopolist would indeed want to produce more, contradicting the idea of not increasing production at this point. This would be inconsistent with stopping at a higher quantity. - Option 7: If MR is still greater than MC at 7, the monopolist would have an incentive to push production beyond 7. The point at which MR crosses MC would be somewhere lower if MR remains above MC at 7. Therefore, stopping at 7 would only make sense if MR ≈ MC is already achieved at a quantity below 7, or if MR < MC at 7, which would imply the cut‑off would be at a smaller quantity. - Option 6: This quantity would be the one where the incremental benefit of producing one more unit no longer covers its cost, i.e., MR ≈ MC. If the prior calculation concluded that the optimal stopping point is 6, that would indicate MR is just about equal to MC here, and producing more would not increase profit. This aligns with the standard MR = MC condition for profit maximization. - Option 5: If the monopolist would not increase production at 5, that would suggest MC has surpassed MR by this level, implying the crossing point occurred at or below 5. However, if the calculation specified 6 as the decision threshold, then 5 would be too low to be the stopping point, unless there is a nonstandard cost or demand structure driving a lower optimum. In summary, the key reasoning hinges on the relationship between marginal revenue and marginal cost across these quantities. The quantity where MR and MC balance (or where MR first falls below MC as output rises) marks the point beyond which increasing production would reduce profit. Each option represents a potential stopping point, but only the quantity at or just beyond the MR = MC intersection aligns with the standard monopolist rule. The examination of each choice should be grounded in this comparative marginal analysis and the given calculation context.

Based on your calculation above, at what point do you think the monopolist would not increase production

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