Which of the following statements is correct?
A) The pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero.
B) In seeking the profit-maximizing output, the pure monopolist underallocates resources to its production.
C) The pure monopolist maximizes profits by producing that output at which the differential between price and average cost is the greatest.
D) Purely monopolistic sellers earn only normal profits in the long run.

Question

Quizplus · Accepted Answer

A pure monopolist maximizes profit where marginal cost equals marginal revenue, which often results in underallocation of resources compared to a competitive market.

Which of the Following Statements Is Correct