A monopoly
A)can set the price it charges for its output and earn unlimited profits.
B)takes the market price as given and earns small but positive profits.
C)can set the price it charges for its output but faces a downward-sloping demand curve so it cannot earn unlimited profits.
D)can set the price it charges for its output but faces a horizontal demand curve so it can earn unlimited profits.

Question

Quizplus · Accepted Answer

A monopoly can set the price it charges for its output, but it faces a downward-sloping demand curve, meaning that as it raises the price, it sells fewer units. This limits the monopoly's ability to earn unlimited profits.

A Monopoly