In the short run, a monopolist will always shut down when
A)total cost is greater than total revenue at all output levels
B)total variable cost is greater than fixed cost
C)total revenue is greater than total variable cost at all output levels
D)fixed cost is greater than total revenue at all output levels
E)total variable cost is greater than total revenue at all output levels

Question

Quizplus · Accepted Answer

In the short run, a monopolist will always shut down when total variable cost is greater than total revenue at all output levels. This is because the firm cannot cover its variable costs and is better off not producing anything at all. Shutting down allows the firm to minimize its losses by reducing its variable costs to zero.

In the Short Run, a Monopolist Will Always Shut Down