Under a policy of average-cost pricing, a monopolist must charge the price at which its ________ cost curve intersects its ________ curve.

Question

Quizplus · Accepted Answer

Under average-cost pricing, the monopolist sets the price at the level where the average cost curve intersects the demand curve. This ensures that the price covers both variable and fixed costs, allowing the firm to earn a normal profit in the long run. The correct option is D, where the monopolist sets the price at the point where the average cost curve intersects the demand curve.

Under a Policy of Average-Cost Pricing, a Monopolist Must Charge