If a monopoly experiences an increase in fixed cost, a.The profit-maximizing price will change b.The marginal...
If a monopoly experiences an increase in fixed cost,
a.The profit-maximizing price will change
b.The marginal revenue curve will also shift
c.The marginal cost curve will remain unchanged
d.None of the above.
Homework Answers
Ans.- (C)
If there is an increase in fixed cost, then average total cost rises but marginal cost stays unchanged.
Marginal revenue curve also remains unchanged.
Since marginal revenue,marginal cost and demand curve remain unchanged so profit maximizing price also remains unchanged.
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