In the short-run equilibrium, a monopolist's profits
A)may be positive, negative, or zero.
B)are positive because of the monopolist's market power.
C)are positive if the product's elasticity of demand is less than 1.
D)are positive if the product's elasticity of demand is greater than 1.

Question

Quizplus · Accepted Answer

In the short-run, a monopolist can experience positive profits due to market power, zero profits if average revenue equals average cost, or negative profits if average cost exceeds average revenue at the chosen output level. The elasticity of demand affects pricing and output decisions but does not solely determine the sign of profits.

In the Short-Run Equilibrium, a Monopolist's Profits