If a Monopolist Incurs a Large Fixed Cost That Shifts

question 4

Multiple Choice

If a monopolist incurs a large fixed cost that shifts its average total cost curve upward,the effect on price and output will be

• A)price and output will both rise
• B)price will rise and output will fall
• C)the firm will lower its price so that elastic demand will raise revenues to cover the additional cost
• D)the firm will pass the higher cost on to customers without changing the amount consumers will buy
• E)there will be no effect on price or output

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