Whenever Average Cost Exceeds Marginal Cost

question 12

Multiple Choice

Whenever average cost exceeds marginal cost,

• A)average cost is rising.
• B)average cost is falling.
• C)marginal cost is rising.
• D)marginal cost is falling.

---

Definitions:

Pure Monopolist

A market structure where a single firm is the sole producer for a product or service, with no close substitutes, giving it significant market power.

Perfectly Elastic

describes a market situation in which the quantity demanded or supplied changes infinitely in response to any change in price.

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating overall profitability beyond breakeven.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for significant competition but also some degree of market power for individual firms.