CFA Practice Question
Refer to the graph below. If the price of the product is $1 and the firm is a natural monopoly, ______
B. the firm will earn economic profit by satisfying the market quantity demanded at that price.
C. the firm can earn profit by producing more than Qc.
D. the firm will incur losses by producing the quantity demanded at that price.
A. there will be a surplus of the product.
B. the firm will earn economic profit by satisfying the market quantity demanded at that price.
C. the firm can earn profit by producing more than Qc.
D. the firm will incur losses by producing the quantity demanded at that price.
Correct Answer: D
Price is below average total cost at the perfectly competitive output level Qc.
User Contributed Comments 0
You need to log in first to add your comment.