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 revenue is greater than marginal revenue
- D. average revenue is less than marginal revenue
The answer to the question is: B. selling price is below the short-run marginal cost
If a monopolist is incurring short-run losses, it means that the selling price is below the short-run marginal cost. This is because in the short run, a monopolist may not be able to adjust its production levels to minimize losses. Therefore, if the selling price is below the short-run marginal cost, the monopolist will incur losses as its revenue from selling goods is not sufficient to cover the variable costs of production.
In a monopolistic market structure, the monopolist has control over the supply of a particular product or service and can influence the market price by adjusting its output. In the short run, a monopolist may face a situation where its total revenue is less than its total variable costs, leading to losses. This occurs when the selling price of the product is lower than the short-run marginal cost of production.
Incurring short-run losses indicates that the selling price is insufficient to cover the short-run marginal cost of production, resulting in a loss for the monopolist.
