passwella.
Menu

WAEC Economics 2023 Question 20

Question 20

Market Structures

A monopolist may enjoy abnormal profit only if its

  1. A.marginal cost exceeds marginal revenue.
  2. B.demand curve is perfectly elastic.
  3. C.price exceeds average total cost.
  4. D.expenditure on advertisement increases.
Show the answer and explanation

Answer: C (price exceeds average total cost.)

Explanation

Abnormal profit exists when price (AR) is above average total cost.