A monopoly produces widgets at a marginal cost of $20 per unit and zero fixed costs.It faces an inverse demand function given by P = -100 − 4Q.Suppose fixed costs rise to $401.What happens in the market?
A) The firm will raise the price.
B) The firm will shut down immediately.
C) The firm will continue to produce the same output and charge the same price.
D) The firm will reduce its output and raise price.

Question

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The Answer of A monopoly produces widgets at a marginal cost of $20 per unit and zero fixed costs.It faces an inverse demand function given by P = -100 − 4Q.Suppose fixed costs rise to $401.What happens in the market?
A) The firm will raise the price.
B) The firm will shut down immediately.
C) The firm will continue to produce the same output and charge the same price.
D) The firm will reduce its output and raise price.

A Monopoly Produces Widgets at a Marginal Cost of $20