Which of the following statements is FALSE?
A) An unregulated, profit-maximizing monopolist will not operate in the inelastic portion of the demand curve.
B) The marginal revenue earned by a monopolist will always be less than the product's price.
C) Typically there are numerous very close substitutes for the product of a monopolist.
D) For a profit-maximizing monopolist, marginal revenue equals marginal cost.

Question

Quizplus · Accepted Answer

A monopolist has the power to control the price of its product as it does not face any competition. Therefore, it is not necessary for a monopolist to have close substitutes. In fact, a monopolist often tries to eliminate or reduce the threat of substitutes to maintain its market power.

Which of the Following Statements Is FALSE