Which of the following statements is (are)true of a monopoly?
(i)A monopoly has the ability to set the price of its product at whatever level it desires.
(ii)A monopoly's total revenue will always increase when it increases the price of its product.
(iii)A monopoly can earn unlimited profits.
A) (i) only
B) (ii) only
C) (i) and (ii) only
D) (ii) and (iii) only

Question

Quizplus · Accepted Answer

Statement (i) is true because a monopoly is the sole producer in the market, and thus has complete control over the price of its product. 
Statement (ii) is false because as the price of the product increases, the quantity demanded will decrease, leading to a decrease in total revenue after a certain point. 
Statement (iii) is also false because there are limits to the monopoly's ability to earn profits, such as regulation or potential competition.

Which of the Following Statements Is (Are)true of a Monopoly