Figure 10-1 Figure 10-1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-1.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 10-1  Figure 10-1 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-1.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

At the quantity where MR = MC, the monopolist will produce Q1 units and charge P1 price. However, the ATC at this quantity (point A) is above the demand curve (point B), indicating that the firm is experiencing losses. Therefore, the best choice is A, the firm will suffer a loss.

Figure 10-1 Figure 10-1 Above Shows the Demand and Cost