Which of the following is TRUE for a profit maximizing monopolist?
A) Marginal cost is always less than average total cost.
B) In the long run, the firm's economic profit equals zero.
C) In the short run, the firm will shut down if its marginal cost is less than its average variable cost.
D) In the short run, the firm can make an economic profit even if its marginal cost is less than its average variable cost.

Question

Quizplus · Accepted Answer

In the short run, a monopolist can make an economic profit even if its marginal cost is less than its average variable cost. This is because a monopolist has market power and can set prices above marginal cost.

Which of the Following Is TRUE for a Profit Maximizing