Which of the following statements are TRUE?
I. Monopolists can raise prices as high as they want and still earn economic profits.
II. Even with no competitors, firms face a downward-sloping demand curve.
III. Just like competitive firms, monopolists maximize profits where marginal revenue equals marginal cost.
A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question

Quizplus · Accepted Answer

Statement I is not true as monopolists face a trade-off between higher prices and decreasing demand for their product. If they raise prices too high, their customers may switch to substitute goods, leading to a reduction in demand for their product. 
Statement II is true as even with no competitors, firms face a downward-sloping demand curve as consumers typically react to changes in price. 
Statement III is true as monopolists, like competitive firms, will look to maximize profits by producing at the point where marginal revenue equals marginal cost.

Which of the Following Statements Are TRUE