A monopolist will earn economic profits when

Question

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A monopolist will earn economic profits when its ATC (average total cost) lies below the demand curve. This allows the monopolist to charge a price that is higher than its production cost, resulting in profit. If ATC were to lie above the demand curve, the monopolist would not be able to charge a price that covers its production cost, and would therefore incur losses. A and B are incorrect because the minimum of AVC (average variable cost) and the intersection of ATC and demand do not necessarily indicate the ability to earn economic profit.

A Monopolist Will Earn Economic Profits When