Question

If the monopoly price is greater than the average costs, the firm ____________.

• A. earns monopoly profits
• B. suffers losses
• C. earns normal profits
• D. earns either profit or loss

Answer 1

The correct option is A earns monopoly profits

As the monopoly firm is the price maker he will choose to set a price above its total cost.

Since the monopoly price is greater than average cost, thus the monopoly firm earns "monopoly profits".