Question

If a pure monopolist is producing a level of output in excess of the MR = MC output
a)It will be in the interest of the firm and society to increase output
b)It will be in the interest of the firm and society to reduce output
c)It will be in the interest of the firm, but not necessarily of society, to reduce output
d)The firm may or may not be maximizing profits.

Answer 1

Answer:

For the question asked at hand, the answer is option no. C

According to which In a situation of a pure monopolistic is producing a level of output in excess of the MR=MC, i.e the Marginal Revenue being equal to Marginal Cost, output then ,

It will be in the interest of the firm, but not necessarily of the society, to reduce the output.

Where a pure monopolist refers to a situation where there is no other competitor in the market competing to bring the prices down. The society wont be in favor of or against the output decreasing because the society's aim differs from the goal of the monopolist. For the monopolist is concerned about his cost of production.

TIP: This is an MCQ question from A level Economics.