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Homework answers / question archive / Which of the following is (are) true of monopoly? (i) A monopoly has the ability to set its price
Which of the following is (are) true of monopoly?
(i) A monopoly has the ability to set its price.
(ii) A monopolist marginal revenue will always increase when it lowers the price of its product.
(iii) A monopoly can never experience an economic loss.
a. (i) only
b. (ii) only
c. (i) and (ii) only
d. (ii) and (iii) only
The correct option is:
a. (i) only
Since the monopolist is the only seller in the market, the entire market is dependent on its supply. The monopolist firm enjoys the complete control of the market and hence has the power to set it's own prices.
