Under Average-Cost Pricing, an Increase in the Monopolist's Production Cost

question 123

Multiple Choice

Under average-cost pricing, an increase in the monopolist's production cost will

• A) decrease its profit because its profit per unit decreases.
• B) not affect its profit because the government adjusts the regulated price equal to the average cost.
• C) increase its profit because the monopolist can reduce the average cost at a greater output level.
• D) none of the above

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Definitions:

Incorporator

An individual or entity that is responsible for the creation and filing of a company's founding documents with the relevant state agency.

Incorporation

The process of legally declaring a corporate entity as separate from its owners, providing it with legal rights and obligations.

Nonprofit Corporation

A corporation that operates for educational, charitable, social, religious, civic, or humanitarian purposes rather than to earn a profit.

Earn Profits

The act of making money in excess of the costs incurred in producing or selling goods or services.