Suppose That a Profit-Maximizing Monopolist Has a Plant of the Optimal

question 107

Multiple Choice

Suppose that a profit-maximizing monopolist has a plant of the optimal size and is producing a level of output at which price is $30, average total cost is $55, and average fixed cost is $40. The firm should

• A) operate in the short run.
• B) shut down in the short run.
• C) exit the market in the long run.
• D) continue to operate in the long run.
• E) both a and c

---

Definitions:

Autarky

An economic system where a country or entity is self-sufficient and does not engage in trade with external parties.

Comparative Advantage

The capability of an entity to generate a product or service with a lesser opportunity cost compared to others, resulting in enhanced trading efficiency.

Consumption Point

A specific point on a budget constraint that shows the combination of two goods that a consumer can afford.

Wheat

A staple grain that serves as a primary food source for a large portion of the world's population, used in a variety of products including bread, pasta, and cereal.