Suppose a Monopolist Has Positive Fixed Costs and Constant Marginal

question 106

Multiple Choice

Suppose a monopolist has positive fixed costs and constant marginal costs.If the government regulates a monopoly's price to marginal cost,in the long run:

• A) the monopolist will earn a profit if ATC > MC.
• B) the monopolist will exit the industry.
• C) the monopolist will earn a profit if ATC > P.
• D) the monopolist will earn zero profits.

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Definitions:

Futures

Financial contracts obligating the buyer to purchase an asset, or the seller to sell an asset, at a predetermined future date and price.

Options

Financial derivatives that provide the holder the right, but not the obligation, to buy or sell an asset at a predetermined price on or before a specific date.

ETFs

Exchange-Traded Funds are investment funds traded on stock exchanges, much like stocks, and hold assets such as stocks, commodities, or bonds.

NAV

Net Asset Value; the total value of a fund's assets minus its liabilities, usually expressed as a price per share.