Which of the following is true of pure monopolies?
A)Monopolies earn positive economic profits in the long run.
B)Monopolies produce output that is higher than the competitive level to maximize profits.
C)Monopolies produce products that have a negligible marginal cost but a high fixed cost.
D)Monopolies reduce welfare by engaging in excessive product differentiation.
E)Monopolies maximize consumer surplus at the cost of producer surplus.

Question

Quizplus · Accepted Answer

Monopolies earn positive economic profits in the long run because they are the sole supplier of a product and can set prices above marginal cost.

Which of the Following Is True of Pure Monopolies