Suppose a monopolist has marginal cost of zero but recurring fixed costs. Then the monopolist will produce the efficient level of output so long as he can first degree price discriminate.
Answer the following statement true (T) or false (F)
True
Rationale: It is efficient to produce so long as consumer surplus when price is set to zero is greater than recurring fixed costs. Since the monopolist can capture all consumer surplus under first degree price discrimination, the monopolist will therefore produce whenever it is efficient to produce.
Economics
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