In the case of pure monopoly:
A) one firm is the sole producer of a good or service which has no close substitutes
B) the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue
C) the demand curve is always elastic
D) a and b only
E) a,b,and c

Question

Quizplus · Accepted Answer

A pure monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes, and profit maximization occurs where marginal cost equals marginal revenue. The demand curve for a monopolist can be elastic or inelastic depending on the price level and consumer preferences, so C is incorrect.

In the Case of Pure Monopoly