Which of the following is not generally true about a profit-maximizing monopolist?
A)The monopolist faces a perfectly elastic demand curve.
B)The monopolist can potentially continue to earn economic profits in the long run.
C)The monopolist charges a price that exceeds marginal cost.
D)The monopolist chooses output where marginal revenue equals marginal cost.
E)All of the above are true.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist faces a downward-sloping demand curve and charges a price that exceeds marginal cost. This is because the monopolist has market power and can control the quantity supplied to the market. In the long run, a monopolist can potentially continue to earn economic profits, but it depends on various factors such as the entry of new firms in the industry or changes in demand and cost conditions. The monopolist chooses the output level where marginal revenue equals marginal cost to maximize its profits. However, the monopolist does not face a perfectly elastic demand curve, as this implies that consumers are willing to purchase any amount of the good at a constant price, which is not the case for a monopolist.

Which of the Following Is Not Generally True About a Profit-Maximizing