Which statement is TRUE about monopolies?
A) Monopolies always earn economic profits.
B) If price falls below the minimum AVC, the monopolist shuts down.
C) If price falls below the minimum AVC, the monopolist continues to produce where MR = MC.
D) Monopolies never earn normal profit.

Question

Quizplus · Accepted Answer

Monopolists, like firms in other market structures, will shut down in the short run if the price falls below the minimum average variable cost (AVC) because they cannot cover their variable costs of production. This decision minimizes their losses to fixed costs.

Which Statement Is TRUE About Monopolies