For a thecreticel nstural mo For a thecretical natural mc C Search Textbook Sclu

Question

For a thecreticel nstural mo For a thecretical natural mc C Search Textbook Sclutions https:/online.smcedu/courses/11130/quizzes/44888/take/questions/1750702 Started: Nov 26 at 6:34pm Quiz Instructions Quiz 4 covers Chapters 13, 14 and 15. It must be submitted by 11/26 11:59 PM D Question 4 1 pts For a theoretical natural monopolist with down-sloping average total cost (ATC) curve If government sets price below the unregulated monopolist price, but above the firm's ATC, the profit maximizing monopolist firm will INCREASE its level of output. O t sets price below the unregulated monopolist price, but above the firm's ATC, this wil not chnge the proft maximizing monopolist firm's level of output O If e, but above the firm's ATC,the profit maximizing monopolist firm will go out of business and not produce any output. O If government t sets price below the unregulated monopolist price, but above the firm's ATC, the profht maximizing monopolist firm will DECREASE its level of output. Previous Next

Explanation / Answer

First option is correct

It will not go out of the business because the price is above the MC. It will earn profit as price is above the ATC. Hence when the legal price is lowered production will be increased because the price is still greater than ATC.

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