A Monopolist Faces a Downward-Sloping Demand Curve and Has Fixed

question 56

Multiple Choice

A monopolist faces a downward-sloping demand curve and has fixed costs so large that when she maximizes profits with a positive amount of output, she earns exactly zero profits.At this positive, profit-maximizing output,

• A)there are decreasing returns to scale.
• B)demand is price inelastic.
• C)marginal revenue is greater than marginal cost.
• D)price equals marginal cost.
• E)average total cost is greater than marginal cost.

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