Refer to the above graph. Consider a monopolist in short-run equilibrium. This monopolist:
A. will cease production since its economic profits are negative.
B. earns economic profit equal to area ABED.
C. has total fixed costs equal to area BEFC.
D. has total variable costs equal to area 0CFQ.
Answer: D
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The labor market in Major League Baseball features
A) monopolistic competition between the teams and professional baseball players. B) an oligopoly by the League in employing professional baseball players that is offset by an oligopsony by the players in the labor market. C) a monopsony by the League in employing professional baseball players that is offset by the players' membership in a labor union. D) a monopoly by the League in employing professional baseball players that is offset by the players' membership in a labor union.
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X. Refer to the given information. An increase in the price of a product that is a complement to X will: A. decrease S, decrease P, and decrease Q. B. decrease D, decrease P, and decrease Q. C. increase D, increase P, and increase Q. D. increase D, increase P, and decrease Q.