JAMB Economics 2009 Objective — Question 23
Question 23 of 50 from the Joint Admissions and Matriculation Board (JAMB) Economics 2009 Objective paper, with the correct answer and a full explanation.
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If a monopolist is incurring short-run losses, this means that his
- A. selling price is above the short-run marginal cost
- B. selling price is below the short-run marginal cost
- C. average cost is greater than marginal revenueCorrect
- D. average revenue is less than marginal revenue
Explanation
What determines whether a firm is making loss or not is the position of the Average Cost. It is difficult to say P<MC leads to short-run loss. Since the MC must be equal to MR at equilibrium and the AR of the monopolist is always greater than MR.
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