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If marginal revenue exceeds marginal cost at the output produced, would a monopolist increase or...

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If marginal revenue exceeds marginal cost at the output produced, would a monopolist increase or decrease output? Explain.

Marginal Cost and Revenue:

Marginal cost is the change in total cost that arises due to increasing output by one unit. Marginal revenue is the same but for total revenue. Firms maximize revenue where marginal cost and marginal revenue are equal.

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Answer: Increase

If marginal revenue exceeds marginal cost, an increase in output will increase total revenue more than total cost. Since profit is...

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Marginal Analysis in Economics: Definition, Formula & Examples

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Chapter 3 / Lesson 47
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Discover what is marginal analysis and the marginal analysis definition. Explore marginal reasoning, marginal cost analysis, and the marginal analysis formula.


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