-A monopolistic firm will shut down if A) P ATC for every level of output. C) P AVC for every level of output. D) P

Question

-A monopolistic firm will shut down if A) P < ATC for every level of output. B) P > ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output.

Quizplus · Accepted Answer

A monopolistic firm will shut down in the short run if the price it can charge for its product is less than the average variable cost (AVC) for every level of output. This is because the firm cannot cover its variable costs, making continued operation unsustainable in the short term.

-A Monopolistic Firm Will Shut Down If