A Monopolist Has Decreasing Average Costs as Output Increases

question 36

Multiple Choice

A monopolist has decreasing average costs as output increases.If the monopolist sets price equal to average cost, it will

• A)produce too much output from the standpoint of efficiency.
• B)lose money.
• C)produce too little output from the standpoint of efficiency.
• D)maximize its profits.
• E)face excess demand.

---

Definitions:

Large Number

A term often used in mathematics and computing to describe a value that is significantly larger than most values considered in a given context.

Product Specifications

Detailed descriptions of a product’s requirements, dimensions, materials, and performance criteria, used as standards for production and quality assurance.

JIT Environment

A production strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs, through just-in-time inventory management.

Layout Tactic

A specific plan or method employed to arrange physical resources in a production or service facility.