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Sagot :
If a monopolist is producing a level of output where MR exceeds MC, then it should Increase its output.
What happens if MR exceeds MC?
- MR is the result of the sale of an additional unit, added to TR. When an additional unit is produced, MC is added to TC.
- Thus, TR-TC becomes maximum for greatest profit when MR=MC.
- The producer will keep making products as long as MR is greater than MC since it will increase his earnings.
- The monopolist will choose the level of output that maximizes profits, where MR = MC, and then set the price for that amount of output according to the market demand curve.
- The monopolist makes a profit if the price is higher than the average cost.
- If the marginal cost exceeds the marginal revenue, the unit is not economically viable for the company to create because it costs more than it makes.
To learn more about MR and MC refer to:
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