If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50, it will increase its profits by:

A. reducing output and raising price.

B. reducing both output and price.

C. increasing both price and output.

D. raising price while keeping output unchanged

D) raising price while keeping output unchanged

Explanation:

In order for any type of business to survive in the long run, marginal revenue must be equal to marginal cost, or Price = Marginal cost.

If a business sells their products at a price lower than their marginal cost, it is losing money. But under certain circumstances it might do it on the short run if at least the Price = Variable costs

In this case, the monopolist must increase its price to match its marginal cost. Profits are maximized when marginal revenue equals marginal costs.