Answer to Question #155977 in Economics of Enterprise for iqra

Question

In the short run, a monopolist will shut down when

a)     average variable cost is greater than price at all output levels

b)     price is greater than average variable cost at all output levels

c)     average total cost is greater than price at all output levels 

d)    average fixed cost is greater than price at all output levels

Answer 1

Monopolist should shut down when price (average revenue) is less than average variable cost at all output levels. Therefore, the answer is (a).

Answer:

(a) average variable cost is greater than price at all output levels