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. |