Which of the following statements is(are) true of monopolies?
(i) they cannot make unlimited profits
(ii) they have the ability to set prices at whatever level they desire
(iii) they do not have to worry about their revenue falling if they increase the prices
A)(i) and (ii)
B)(ii) only
C)(ii) and (iii)
D)(i), (ii) and (iii)

Question

Quizplus · Accepted Answer

(i) Monopolies cannot make unlimited profits because their profits are constrained by the demand for their product. Even though they have significant control over their prices due to lack of competition, they cannot charge more than what consumers are willing to pay. (ii) Monopolies have the ability to set prices because they are the sole provider of a product or service in the market, giving them significant control over pricing. However, this doesn't mean they can set prices without considering demand elasticity. (iii) This statement is false because monopolies do have to consider the potential for revenue loss if prices are set too high, as consumers may reduce their consumption or seek alternatives if possible.

Which of the Following Statements Is(are) True of Monopolies