will not continue. For a monopoly firm, if AVC = $35, P = $30, and ATC = $40, th

Question

will not continue.

For a monopoly firm, if AVC = $35, P = $30, and ATC = $40, then the firm should:

reduce production.

produce at the point at which MC = MR.

increase production.

shut down.

(Figure: Interpreting Cost and Revenue Curves) The graph shows the cost and revenue curves for a monopolist. Based on the graph, the monopolist:

is earning an economic profit. is earning a normal profit only. breaks even.

will not continue.

For a monopoly firm, if AVC = $35, P = $30, and ATC = $40, then the firm should:

reduce production.

produce at the point at which MC = MR.

increase production.

shut down.

Explanation / Answer

Answer.)

Q1.) will not continue.

Q2.) shut down.

Since price is lower than AVC therefore, there is no point in continuing production.

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