Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 15 - Part V - Monopoly - Quick Check Multiple Choice - Page 324: 1

Answer

d) Decreasing average total cost.

Work Step by Step

A monopolistic firm usually has very high fixed costs in the beginning. These high fixed costs prevent other firms from successfully competing with this firm. When its output increases, the fixed costs do not increase while the revenues increase. Because of the increased output, the total cost that the firm incurs is divided between this higher number of output. So, the higher the quantity produced, the more the average total costs decrease.
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