Which of the following need not be true of a monopoly?
A)The firm must be the only producer of the product.
B)The product must have no close substitutes.
C)There must be high barriers to entry.
D)The firm must earn an economic profit.
E)All of the above are true of monopoly.

Question

Quizplus · Accepted Answer

While a monopoly often earns an economic profit due to its ability to set prices above marginal cost, it is not necessary for the firm to always earn a profit. In the short run, a monopoly may experience losses, but still operate because it can set prices above its average variable cost. Therefore, choice D need not be true of a monopoly.

Which of the Following Need Not Be True of a Monopoly