Question

15.3 Unanswered 2 attempts left If the fixed cost of a monopolist increases then... (Assume that producing x>0 is still profitable after the increase) Quantity increases, price decreases. Quantity decreases, price increases. Quantity increases, price increases, profits increase. Quantity and price remains unchanged, profits decrease.

Answer 1

Answer
Option D
the increase in the fixed cost does not change the profit-maximizing production level as the firm produces at MC=MR and MC does not change with fixed cost
fixed cost increases so the profit decreases
profit =total revenue -total cost
total revenue =P*Q
the price and quantity remain the same so the total revenue is constant
total cost =varible cost +fixed cost
fixed cost increases so the total cost increases and profit decreases.