-The figure above shows the demand and cost curves for a single-price monopoly. Which of the following statements is FALSE?
A) To maximize its profit, the firm will set marginal revenue equal to zero by producing 12.5 units.
B) The firm will make an economic profit.
C) The firm is a not a natural monopoly.
D) The firm will set price where demand is elastic.

Question

-The figure above shows the demand and cost curves for a single-price monopoly. Which of the following statements is FALSE?
A) To maximize its profit, the firm will set marginal revenue equal to zero by producing 12.5 units. 
B) The firm will make an economic profit. 
C) The firm is a not a natural monopoly. 
D) The firm will set price where demand is elastic.

Quizplus · Accepted Answer

A single-price monopoly maximizes profit by producing where marginal revenue equals marginal cost, not where marginal revenue equals zero.

-The Figure Above Shows the Demand and Cost Curves for a Single-Price