An unregulated monopoly finds that its marginal cost exceeds its marginal revenue. In which segment of the demand curve the firm is likely to be operating, and how the firm can reduce its loss:
| A. | The firm operates in the lower half of the curve where marginal revenue is negative. The firm has to lower its output until the price elasticity of demand exceeds 1 in absolute value. | |
| B. | Insufficient information to answer the question. The firm should lower its output and raise prices. | |
| C. | The firm operates in the lower half of the demand curve. The firm should scale up its operation in order to achieve economies of scale and move down the AC curve to reduce average costs. | |
| D. | The firm operates in the lower half the curve where marginal revenue is negative. The firm has to lower its output and move up along the demand curve. |