Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.If the firm's average total cost curve is ATC3,the firm will
A)suffer a loss.
B)break even.
C)make a profit.
D)face competition.

Question

Figure 15-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-2.If the firm's average total cost curve is ATC3,the firm will
A)suffer a loss. 
B)break even. 
C)make a profit. 
D)face competition.

Quizplus · Accepted Answer

If the firm's average total cost curve is ATC3, it intersects the demand curve at a price that is below the average total cost curve. This means that the monopolist is not earning enough revenue to cover its costs, resulting in a loss. Therefore, the best choice is A, the firm will suffer a loss.

Figure 15-2 Above Shows the Demand and Cost Curves Facing