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)
D)(ii) and (iii)

Question

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)
D)(ii) and (iii)

Quizplus · Accepted Answer

Statement (i) is true because a monopoly has no competitors and therefore has market power to set the price of its product at a level that maximizes its profit. 
Statement (ii) is false because as the price of the product increases, the quantity demanded decreases, resulting in a decrease in total revenue. 
Statement (iii) is also false because a monopoly's profit is limited by the elasticity of demand for its product, as well as any potential government regulations or interventions.

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