CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which of the following is true?
A. Long-run equilibrium implies that a monopolist may or may not be minimizing average total cost.
B. Long-run equilibrium implies that a monopolist is not minimizing average total cost.
C. In the long run, a monopolist can not earn positive profits.
Explanation: In order to minimize average total cost under long-run equilibrium, the monopolist would have to produce a larger output. The monopolist charges a price that is too high and produces an output that is too low to minimize average total cost.

User Contributed Comments 1

User Comment
aakash1108 what about the cost of lobbying and rent seeking in the long run? wouldn't that add to the ATC.
You need to log in first to add your comment.