If a monopolist is forced to set price equal to average total cost, economic profit
A)will be negative, and the monopolist may go out of business
B)will be zero
C)will be positive
D)will be negative, and the firm will stay in business if there are significant fixed costs
E)may be positive, negative, or zero

Question

Quizplus · Accepted Answer

When a monopolist sets price equal to average total cost, it covers all its costs, including opportunity costs, resulting in zero economic profit.

If a Monopolist Is Forced to Set Price Equal to Average