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Michelle Boileau
on Oct 27, 2024

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Assume that a monopoly is currently earning economic profits.If a permanent change in fixed cost raises average total cost above the demand curve:

A) price and output will increase.
B) more monopolies will enter.
C) the monopoly will go out of business.
D) marginal cost will be greater than marginal revenue.

Economic Profits

Profits earned by a firm or individual after considering both explicit financial costs and the implicit costs of alternatives forgone.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the amount of goods or services produced.

Demand Curve

A graph showing the relationship between the quantity of a good that consumers are willing and able to purchase and the price of the good.

  • Evaluate the impact of changes in fixed and variable costs on a monopoly's pricing and output decisions.
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ansha makhmudovaNov 01, 2024
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