Which of the following is true about a monopoly?
A) A monopoly charges a higher price and produces a lower output level than if the market were competitive.
B) A monopoly is guaranteed an economic profit.
C) A monopoly charges the highest possible price.
D) A monopoly will shut down whenever losses are incurred.
E) All of these.

Question

Quizplus · Accepted Answer

A monopoly has market power, which means it can set prices higher than in a competitive market. It often produces a lower quantity than in a competitive market to maintain higher prices. A monopoly is not guaranteed an economic profit, as it still has to consider its costs and demand. A monopoly may not charge the highest possible price, as it needs to consider consumer demand and potential competition. A monopoly may not shut down when losses are incurred, as it may be able to sustain losses for a period of time due to its market power.

Which of the Following Is True About a Monopoly