The Exclusive Gift Company has a monopoly over the sale of gold hula hoops. This company is currently pricing and producing where marginal revenue is equal to marginal cost. It is selling 50 gold hula hoops at a price of $5,000 each. Total costs for the company are $300,000 of which fixed costs are $100,000. You are hired as an economic consultant to this company. You should advise this monopolist to

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The company is covering its variable costs since total costs ($300,000) minus fixed costs ($100,000) equals $200,000, which is less than the revenue ($250,000). However, it is not covering total costs, so it should continue in the short run but consider exiting in the long run if conditions don't improve.

The Exclusive Gift Company Has a Monopoly Over the Sale