If the government imposes a price ceiling below the monopolist's average cost curve, then in the long run the regulation makes:
A)consumers better off.
B)consumers worse off.
C)the monopolist better off.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

When a price ceiling is imposed below the monopolist's average cost curve, the monopolist will no longer be able to cover their costs and will exit the market in the long run. This results in a shortage of the good or service which creates a deadweight loss and makes consumers worse off. The monopolist is forced to operate at a loss, so they are not better off either.

If the Government Imposes a Price Ceiling Below the Monopolist's