If a monopolist that does not practice price discrimination is operating at an output level where price equals average total cost,we can conclude that _____
A)its economic profit is $0.
B)it is not maximizing profit.
C)it should go out of business in the long run.
D)it is not earning a normal profit.
E)it should shut down in the short run.

Question

Quizplus · Accepted Answer

If price equals average total cost, the monopolist is only earning enough revenue to cover all of its costs. Therefore, its economic profit is $0. In this case, the monopolist is not earning a profit above its opportunity cost, which is a normal profit.

If a Monopolist That Does Not Practice Price Discrimination Is