A monopolist may enjoy abnormal profit only if its
ECONOMICS
WAEC 2023
A monopolist may enjoy abnormal profit only if its
- A. marginal cost exceeds marginal revenue
- B. demand curve is perfectly elastic
- C. expenditure on advertisement increases
- D. price exceeds average total cost
Correct Answer: D. price exceeds average total cost
Explanation
A monopolist may enjoy abnormal profit only if its price exceeds average total cost. This is because a monopolist is the only producer in the market, and they can therefore set the price of their product. If the price exceeds average total cost, the monopolist will be making a profit.
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