Y7

17. If a monopolist is producing at an output level where price equals average variable cost in the shor run, then a. the firm is earning a normal profit b. any increase in average variable cost will cause the firm to shut down temporarily in the short run c. any increase in average variable cost will reduce the economic loss of the firm d. any decrease in average variable cost will increase the economic loss of the firm e. the firm should lower price in order to make an economic profit 18. If a monopolist's demand curve shifts to the left until it becomes tangent to its ATC curve at the output level where MR equals MC, the monopolist a. will make positive economic profit b. will make only a normal profit c. will suffer losses d. will not be optimizing price and output e. will increase output in order to increase profit 19. In the short run, a monopolist a. may incur a loss b. always earns a normal profit c. always earns positive economic profit or above normal profit d. will immediately exit the market if it incurs losses e. will shut down if price is below ATC 20. Monopoly results in an inefficient allocation of resources because a. a monopolist chooses a level of output at which marginal revenue is greater than marginal cost b. a monopolist chooses a level of output at which average total cost is at a minimum c. a monopolist charges a price equal to marginal cost d. consumers pay a price greater than the marginal cost and are unable to obtain additional units of the good