If the Average Total Cost Curve Is Always Above the Demand

question 35

Multiple Choice

If the average total cost curve is always above the demand curve of a monopolist, what can we conclude?

• A) The monopolist will earn an economic profit.
• B) Entry will occur, forcing the monopolist to reduce price and expand output.
• C) The monopolist will suffer economic losses.
• D) The monopolist must be producing inefficiently.

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Definitions:

Leading Cause

The primary factor or condition that results in a specific outcome or effect, especially in contexts like health, where it might refer to the most common cause of death or illness.

Achieve Potential

The process of realizing one's full capabilities or reaching the highest level of performance possible.

Health

According to the World Health Organization, is “the ability of an individual to achieve his [or her] potential and to respond positively to the challenges of the environment.”