With average cost pricing, the monopolist

Name: With average cost pricing, the monopolist
Brand: Quizplus
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Question

Quizplus · Accepted Answer

With average cost pricing, a monopolist sets the price equal to the average cost of production, which allows the firm to cover all its costs, including a normal rate of return on its investment. This means the firm earns a normal profit, which is considered the minimum profit necessary to keep the firm in the business, covering both explicit and implicit (opportunity) costs.

With Average Cost Pricing, the Monopolist