Micro Foundations · advanced
What moves on the Monopoly & Cost Curves diagram
Fixed costs shift AC but not MC, so the profit-maximizing price and output are unchanged, only profit falls.
Watch closely, this one's a trap.
Rent doubles: AC jumps, but MC hasn't moved an inch.
Price and quantity DON'T change. Only profit shrinks. Sunk and fixed costs never belong in the pricing decision.
Examiners ask this as: fixed cost monopoly, rent rises, sunk cost pricing.
Other scenarios on Monopoly & Cost Curves