A monopolist will shut down when in the long run and in the

A monopolist will shut down when _________in the long run and _________in the short run.

P > ATC; P > ATC

P < ATC; P < AVC

P = ATC; P = ATC

P < ATC; P > AVC

Solution

P< ATC; P< AVC

Explanation:

In the long run, the firm will shut down when the price is less thann average total cost. That means the firm will not bear any loss not even of fixed cost.

However, in the short run, the firm will close down the operations when the price is not sufficient to recover the average variable c cost. In the short run, the firm is ready to bear the loss of fixed cost.