Which of the following statements regarding a monopolist is false?
A)The marginal revenue curve lies below the demand curve for the monopolist's output.
B)Unlike a perfectly competitive firm, a monopolist faces little or no competition.
C)The monopolist sets price equal to marginal cost to maximize profits.
D)The monopolist may or may not earn positive economic profits.

Question

Quizplus · Accepted Answer

The monopolist sets output where marginal revenue equals marginal cost to maximize profits, but this does not necessarily mean that price is equal to marginal cost. In fact, the monopolist will typically set a price higher than marginal cost, resulting in a markup over cost and positive economic profits.

Which of the Following Statements Regarding a Monopolist Is False