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A single-price monopolist is maximizing profit and realizing diseconomies of scale at its current production level.  Which...

A single-price monopolist is maximizing profit and realizing diseconomies of scale at its current production level.  Which of the following inequalities reflect this information? Group of answer choices

ATC > P > MR = MC

P = MR = MC > ATC MR =

MC > P > ATC

P > MR = MC > ATC

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Answer #1

Answer : The answer is option "P > MR = MC > ATC".

MC curve intersect the ATC curve at ATC curve's minimum point. The diseconomies of scale occur when firm's ATC is increasing. Hence at firm's diseconomies of scale situation the MC become greater than ATC. For single price monopolist the profit maximizing condition is MR = MC. And as the demand curve lies above MR curve hence the price (P) is greater than MR = MC at profit maximizing output level. So, if the monopolist face the diseconomies of scale situation then at profit maximizing output level

P > MR=MC > ATC occur.

Therefore, option "P > MR = MC > ATC" is the correct answer.

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