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April 21, 2014

Homework Help: Economics

Posted by Steve on Tuesday, March 20, 2012 at 10:47pm.

A monopoly produces widgets at a marginal cost of $8 per unit and zero fixed costs. It faces an inverse demand function given by P = 38 - Q.

Suppose fixed costs rise to $200. What will happen in the market?


A.The firm will decrease its output and lower its price.

B. The firm will increase the price.

C. The firm will shut down immediately.

D. The firm continues to produce the same output and charge the same price.

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