A profit-maximizing monopolist

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist is not guaranteed to make a positive profit. While being a monopolist does provide some advantages such as being able to set prices higher than in a competitive market, it also means that the monopolist is the only supplier in the market and must therefore take on all of the risks associated with production and sales. If the monopolist's costs (fixed and variable) are too high, then it may not be able to set a price high enough to cover all of its costs and still make a profit. Additionally, a monopolist may face competition from substitute goods, which could limit its power to set prices high enough to make a positive profit. Therefore, the profit of a monopolist is uncertain and may not always be positive.

A Profit-Maximizing Monopolist