If the Average Total Cost Curve Is Always Above the Demand

question 159

Multiple Choice

If the average total cost curve is always above the demand curve of a monopolist,

• A) the profits of the monopolist will be large.
• B) the monopolist must be producing inefficiently.
• C) even a monopolist will suffer economic losses.
• D) entry will occur, forcing the monopolist to reduce price and expand output.

Comprehend the dissolution, liquidation, and survivorship processes in business organizations.

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Definitions:

Lower Price

A strategy or situation where the cost of goods, services, or commodities is reduced to make them more attractive to buyers.

Maquiladoras

Factories located in Mexico, typically near the US border, that import materials and equipment on a duty-free and tariff-free basis for assembly or manufacturing and then export the assembled product.

Foreign Trade Zones

Designated areas where goods can be imported, stored, handled, manufactured, or reconfigured without being subject to customs duty.

Labor Costs

The total expenditures related to compensating employees, including wages, benefits, and taxes.