Suppose a Lazy Monopolist's Fixed Costs Are Higher Than the Fixed

question 25

Multiple Choice

Suppose a lazy monopolist's fixed costs are higher than the fixed costs of an efficient monopolist. In all other respects the monopolists are the same. Which of the following statements about this lazy monopolist is true?

• A) Its total profit is lower than that of the monopolist producing efficiently.
• B) Its total profit is the same as that of the monopolist producing efficiently.
• C) Its total revenue is less than that of the monopolist producing efficiently.
• D) It produces less than does the monopolist producing efficiently.

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Definitions:

Downward Sloping

A description of a curve or line that shows a decrease in one variable as another variable increases, commonly seen in demand curves.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded by consumers.

Perfect Competition

Perfect Competition is a market structure characterized by a large number of small firms, identical products sold by all firms, no barriers to enter or exit the market, and perfect knowledge of prices and technology.

Perfect Competitor

Describes a market scenario where numerous small firms compete against each other, and no single firm can influence the market price of goods and services.