Economics (AS & A Level) · May / June 2021 · Paper 32 · Question 10

The diagram shows the long-run cost and revenue curves for a public sector monopoly. The government decides to set a price that maximises social welfare. What will be the consequence of this decision?

1. AThe firm will experience diseconomies of scale.
2. BThe firm will make a loss.
3. CThe firm will maximise profits.
4. DThe firm will maximise total revenue.

As printed in the paper