For a monopoly firm, if AVC = $35, P = $30, and ATC = $40, then the profit-maximizing firm should
A) increase production.
B) produce at the point at which MC = MR.
C) reduce production.
D) shut down.

Question

Quizplus · Accepted Answer

Since the price (P = $30) is below the average variable cost (AVC = $35), the firm would minimize its losses by not producing any output, leading to a shutdown decision. Producing would result in losses greater than its fixed costs.

For a Monopoly Firm, If AVC = $35, P =