Suppose a Monopolist's Costs and Revenues Are as Follows: ATC

question 373

Multiple Choice

Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00. The firm should

• A) increase output and decrease price.
• B) decrease output and increase price.
• C) not change output or price.
• D) shut down.

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Definitions:

Product Diversity

The variance in products and services offered by companies or available in a market, aiming to cater to different consumer preferences.

Existing Firms

Companies or businesses that are currently operating in the market, as opposed to new startups or entities planning to enter the market.

Economic Losses

Economic Losses indicate a situation where the total cost of a business or activity exceeds the total revenue generated, resulting in a net loss.

Long-run Equilibrium

A state in economics where all factors of production and economic agents are fully adjusted to the conditions, and no further tendency for change exists.