Economics questions?

Question

Assume a monopolist is producing output at a profit maximizing rate and charging a price along its demand curve, consistent with this rate of output. Would this profit-maximizing monopolist pass through increases in fixed costs (such as license fees) to their customers in the form of higher prices? Assume there are no other changes. That is, the product demand curve remains the same and there are no variable cost changes

Answer 1

well if the cost is changing then it is not fixed which means it is possible to change their marginal cost curve  HOWEVER,

the spirit of this question is one of does fixed costs translate to price and the answer is no. The mkt supply curve for a monopoly is the firms marginal cost curve. MCs are not affected by fixed costs so there should be no change in price.

ONE SIDE BAR

if the fees are large enough, it could be that average costs are driven above price at which case the monopoly is driven out of business and no production is done and everyone loses.