Under what circumstances will a profit-maximizing monopolist be forced to shut down?
A)If the average revenue exceeds the average costs of production.
B)If the average revenue exceeds the average variable costs of production.
C)If the average variable costs of production exceeds the average revenue.
D)If marginal revenue exceeds average revenue.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will be forced to shut down in the short run if the average variable costs of production exceed the average revenue. This is because the firm cannot cover its variable costs, making continued operation unsustainable.

Under What Circumstances Will a Profit-Maximizing Monopolist Be Forced to Shut