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Where is the monopolist's fair-return price?

Posted on April 17, 2014 at 9:30 AM

If a monopoly is regulated to break even (AKA earn zero economic profit AKA normal profit), it will produce at a level of output where price (AKA demand) equals the average total cost curve (P=D=ATC).

This is known as the fair-return price. Even though there are no economic profits, accounting profits can be positive due to the presence of opportunity costs.

AP Microeconomics Unit 2 Product Markets

Categories: AP Microeconomics, Micro Unit 2 Product Markets

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