In the case of pure monopoly:

a. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue

b. one firm is the sole producer of a good or service which has no close substitutes

c. a, b, and c

d. the demand curve is always elastic

e. a and b only

Question

Miko

Business

3 January, 07:02

In the case of pure monopoly:

a. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue

b. one firm is the sole producer of a good or service which has no close substitutes

c. a, b, and c

d. the demand curve is always elastic

e. a and b only

+1

Answers (1)

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Gianna · Answer 1

e. a and b only

A and B both statements are correct, because in a monopoly in order to maximize profits a firm will have to produce the amount of output at which its marginal costs = to its marginal revenues, by doing this the firm is able to maximize its profit. Also it is a basic and necessary characteristic of a monopoly that in a pure monopoly only one firm is in the market or industry and is the sole producer.

In the case of pure monopoly:a. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenueb. one firm is the sole producer of a good or service which has no close substitutesc. a, b, and cd. the demand curve is always elastice. a and b only