In the long run, profit-maximizing monopolists facing a downward-sloping demand curve
A)can obtain profits greater than their opportunity costs of capital.
B)can produce where average total costs are minimized
C)can have a price that is the same as marginal revenue.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

Monopolists can set prices above their marginal costs due to the lack of competition, allowing them to earn profits greater than their opportunity costs of capital. They do not necessarily produce where average total costs are minimized (B), and their price is typically above marginal revenue due to the downward-sloping demand curve (C), making D incorrect.

In the Long Run, Profit-Maximizing Monopolists Facing a Downward-Sloping Demand