Refer to the above figure.In the short run,this monopolist will:

Question

Quizplus · Accepted Answer

In the short run, the monopolist will produce at the output level where marginal cost equals marginal revenue, which is at point A. While this output level may result in economic losses, the monopolist will still produce as long as the price exceeds the average variable cost (AVC) at this output level. Since price is above the AVC at point A, the best choice for the monopolist is to produce at the output level of 0A. The other options (shut down, produce 0B, produce 0C) would result in even greater losses for the monopolist.

Refer to the Above Figure