Asked by MaryJean Throm on Jul 08, 2024
Verified
Which statement is true?
A) The monopolist operates at the minimum point of its average total cost curve.
B) Once a monopoly is set up,it is impossible to dislodge it.
C) Monopolies are always large firms.
D) Price is always read off the demand curve.
Average Total Cost
The total cost divided by the number of units produced, representing the cost per unit of output.
Demand Curve
A graph showing the relationship between the quantity of a good that consumers are willing to buy and the price of the good.
- Clarify the effects of monopoly dominance on the strategies for setting prices and determining production levels.
Verified Answer
SY
Shafinaz YacobJul 09, 2024
Final Answer :
D
Explanation :
Monopolists determine the price of their product by finding the point on the demand curve that maximizes their profit. This means they look at how much they can charge (the price) for a certain quantity of goods, which is directly read from the demand curve. The other statements are not universally true: monopolists do not always operate at the minimum point of their average total cost curve (A), it is possible, though difficult, to dislodge a monopoly (B), and monopolies can be of any size, not necessarily large (C).
Learning Objectives
- Clarify the effects of monopoly dominance on the strategies for setting prices and determining production levels.