In the Short Run, When a Monopolist Incurs a Loss

question 227

Multiple Choice

In the short run, when a monopolist incurs a loss, it will

• A) always shut down.
• B) always produce where marginal cost equals marginal revenue.
• C) produce as long as total revenue is sufficient to cover variable costs.
• D) produce as long as total revenue is sufficient to cover fixed costs.

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Definitions:

Price Elasticity

Measures the responsiveness or sensitivity of the quantity demanded for a product to a change in its price.

Normal Good

A good for which demand increases as the income of the consumer increases.

Aggregate Demand

The total demand for all goods and services within a specific economy at a given overall price level and in a given time period.

Income Distribution

Refers to the way total personal income is distributed among individuals or households in an economy, affecting economic inequality.