Final answer:
To maximize profit, a monopolist with a selling price of $50 per unit and a marginal cost of $25 should increase output until the marginal cost equals the selling price.
Step-by-step explanation:
If a monopolist's price is $50 per unit and its marginal cost is $25, then to maximize profit the firm should increase output. This is because the fundamental rule for profit maximization in a monopoly (or any firm) is to produce up to the point where marginal revenue (MR) equals marginal cost (MC). As long as the marginal revenue exceeds the marginal cost, producing the extra unit adds to overall profits. The provided information indicates that the price, which can be seen as the marginal revenue in this context, is higher than the marginal cost, suggesting there is room to increase output profitably.
For example, if at a certain output level, the marginal revenue of producing an additional unit is $50, and the marginal cost of producing that unit is only $25, the firm can increase its profit by $25 for each additional unit sold. Thus, the monopoly should keep increasing production as long as the price exceeds the marginal cost. When the marginal cost eventually rises to equal the price, that's the profit-maximizing quantity of output. At that point, the firm should stop increasing production.