Which of the Following Is TRUE for a Profit Maximizing

question 545

Multiple Choice

Which of the following is TRUE for a profit maximizing monopolist?

• A) Marginal cost is always less than average total cost.
• B) In the long run, the firm's economic profit equals zero.
• C) In the short run, the firm will shut down if its marginal cost is less than its average variable cost.
• D) In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost.

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Definitions:

Unregulated Market

A market where economic activities are freely carried out without governmental intervention in terms of prices, production, and distribution.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specific price.

Product

Any good, service, or idea that can be offered to a market to satisfy a want or need.

Excess Supply

A situation where the quantity of a good or service supplied is greater than the quantity demanded at the current price.