The DeBeers Company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

A. exceed both the marginal cost and the average total cost of diamonds.
B. be equal to the average total cost of diamonds.
C. be equal to the marginal cost of diamonds.
D. exceed the marginal cost of diamonds but be equal to the average total cost of diamonds.


Answer: A

Economics

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