What would result from a reduction in a monopolist's fixed costs
A)The profit-maximizing price would decrease, and the profit-maximizing quantity produced would increase.
B)The profit-maximizing price would increase, and the profit-maximizing quantity produced would decrease.
C)The profit-maximizing price would decrease and the profit-maximizing quantity produced would not change.
D)The profit-maximizing price would increase, and the profit-maximizing quantity produced would not change.

Question

Quizplus · Accepted Answer

A reduction in fixed costs does not affect the marginal cost or the demand curve, so the profit-maximizing quantity remains unchanged. However, lower fixed costs increase profits, potentially allowing for a lower price if the monopolist chooses to pass on some of the cost savings to consumers.

What Would Result from a Reduction in a Monopolist's Fixed