Suppose a Monopolist Charges a Price Corresponding to the Intersection

question 54

Multiple Choice

Suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves.If the price is between its average variable cost and average total cost curves,the firm will:

• A)earn an economic profit.
• B)stay in operation in the short run, but shut down in the long run if demand remains the same.
• C)shut down.
• D)charge higher price.

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