Which of the following statements is (are) true of a monopoly? (i)
A monopoly has the ability to set the price of its product at whatever level it desires.
(ii)
A monopoly's total revenue will always increase when it increases the price of its product.
(iii)
The more a monopoly increases output, the higher the profits.
A)(i) only
B)(ii) only
C)(i) and (ii) only
D)(ii) and (iii) only

Question

Quizplus · Accepted Answer

A monopoly has the power to set prices, but that does not mean it can always set prices at whatever level it desires. Prices must be set at a level where the monopolist can maximize its profits. Additionally, increasing output may not always result in higher profits for a monopoly, as it may experience diminishing marginal returns or incur additional costs. Therefore, statement (ii) and (iii) are not always true.

Which of the Following Statements Is (Are) True of a Monopoly