Final answer:
A profit-maximizing monopoly does not seek to maximize production; instead, it equates MR to MC, and maximises profit by not producing beyond this point as it would need to lower the price to sell additional output, which would reduce profits.
Step-by-step explanation:
A monopoly that maximises profit does so by equating marginal revenue (MR) to marginal cost (MC). This does not equate to maximizing production because to sell additional units of output, the monopoly has to decrease the product's price due to the downward sloping demand curve, which in turn reduces the marginal revenue.
The correct answer to the question is b. is not also maximising production because price must be reduced to sell additional output. Increasing output beyond the MR=MC point means that the marginal cost associated with producing one more unit is higher than the revenue that unit brings in, reducing profits.
For a monopolist, total revenue will increase initially with increased output but will start to decline as output continues to grow because a higher quantity can only be sold at a lower price. Consequently, this also leads to a decrease in marginal revenue for additional units sold.
A profit-maximising monopoly operates where MR=MC, and will not strive for maximum production since producing more beyond that equilibrium point would mean that additional units are being sold at a price lower than their marginal cost, ultimately reducing profits.