Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.What happens to the monopolist represented in the diagram in the long run?
A)It will raise its price at least until it breaks even.
B)If the cost and demand curves remain the same, it will exit the market.
C)The government will subsidise the monopoly to enable it to break even.
D)It will be forced out of business by more efficient producers.

Question

Figure 9.3  Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.What happens to the monopolist represented in the diagram in the long run?
A)It will raise its price at least until it breaks even. 
B)If the cost and demand curves remain the same, it will exit the market. 
C)The government will subsidise the monopoly to enable it to break even. 
D)It will be forced out of business by more efficient producers.

Quizplus · Accepted Answer

In the long run, if the cost and demand curves remain the same, the monopolist will continue making losses and eventually exit the market. This is because it cannot sustain its operations while incurring losses. Therefore, B is the best choice.

Figure 93 Figure 9