Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.2.If the firm's average total cost curve is ATC₃, the firm will

Question

Figure 9.2 Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC<sub>3</sub>, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition.

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.If the firm's average total cost curve is ATC<sub>3</sub>, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition.

Figure 9.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.2.If the firm's average total cost curve is ATC₃, the firm will

Quizplus · Accepted Answer

The profit-maximizing output level for a monopolist is where marginal cost (MC) equals marginal revenue (MR). In this case, the firm would produce at output level Q1 where MC=MR. The price charged for this output level would be P1 on the demand curve. However, at this price, the average total cost (ATC) is higher than the price, resulting in a loss for the firm. Therefore, the best choice is A, which states that the firm will suffer a loss.

Figure 92 Figure 9