Which of the following statements about monopoly is false?
A)A single firm serves the market.
B)There are no close substitutes for the monopolist's output.
C)There are usually significant barriers to entry.
D)Because there is a single firm serving the entire market, the monopolist can charge whatever price it wants to for its output.

Question

Quizplus · Accepted Answer

The statement "Because there is a single firm serving the entire market, the monopolist can charge whatever price it wants to for its output" is false. Monopolists do not have complete control over price because they still face a downward sloping demand curve. If they set the price too high, they will sell fewer units and earn less revenue. Therefore, the monopolist must choose a price that balances the trade-off between higher prices and lower sales.

Which of the Following Statements About Monopoly Is False