If regulators require a monopoly to earn zero economic profit,the monopoly will produce the quantity where
A) the marginal cost curve crosses the average cost curve.
B) the marginal cost curve crosses the demand curve.
C) the average cost curve crosses the demand curve.
D) the marginal cost curve crosses the marginal revenue curve.

Question

Quizplus · Accepted Answer

When regulators require a monopoly to earn zero economic profit, the monopoly will produce the quantity where the average cost curve crosses the demand curve. This ensures that the price charged is equal to the average cost of production, allowing the firm to cover all its costs (including a normal return on investment) but not earn any economic profit above that.

If Regulators Require a Monopoly to Earn Zero Economic Profit,the