In the long run,a monopolist incurring short-run losses is likely to
A) charge the highest price possible.
B) increase the demand.
C) do nothing unless demand conditions change.
D) change the scale of operations.
E) do nothing unless cost conditions change.

Question

Quizplus · Accepted Answer

In the long run, a monopolist is likely to adjust its scale of operations to improve profitability. If the monopolist is incurring short-run losses, it will have to consider whether it can reduce its costs by producing on a smaller scale, or whether it should continue to produce and accumulate losses in the short run in order to maintain some level of market power. However, in the long run, the monopolist cannot continue to sustain losses indefinitely, so it will eventually have to adjust its scale of operations to remain profitable.

In the Long Run,a Monopolist Incurring Short-Run Losses Is Likely