An increase in the fixed costs of a monopoly firm would _______ price and _______ quantity in the short run.
A) increase; decrease
B) increase; increase
C) not change; not change
D) do none of the above

Question

Quizplus · Accepted Answer

Fixed costs do not affect the price or quantity decisions of a monopoly in the short run because pricing decisions are based on marginal costs, not fixed costs.

An Increase in the Fixed Costs of a Monopoly Firm