In the long run, all of the following are true for a monopolist EXCEPT
A) P ATC.
B) P = MC.
C) MR = MC.
D) P AVC.

Question

In the long run, all of the following are true for a monopolist EXCEPT
A) P > ATC.
B) P = MC.
C) MR = MC.
D) P > AVC.

Quizplus · Accepted Answer

A monopolist can earn economic profit in the long run, which means that P can be greater than both AVC and ATC. However, a monopolist will not necessarily produce where P = MC since they have market power to set a higher price. In fact, a monopolist will typically produce where MR = MC to maximize profits. Therefore, the only statement that is not true for a monopolist is that P = MC.

In the Long Run, All of the Following Are True