“Pure monopoly guarantees economic profits.” Discuss whether this is a valid statement
What will be an ideal response?
The statement is not always valid. A pure monopolist has a greater likelihood of earning economic profits, but the monopoly position does not guarantee profits. There can be weak demand for a monopoly product that results in the monopolist price being less than average total costs at the profit-maximizing level of output. This situation results in economic losses for the monopolist.
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Which of the following is not included in the rules of the game?
a. The laws, customs, conventions, and other institutional elements associated with trade b. Property rights c. Ensuring that the market process generates a fair price for all d. A stable political environment e. A stable legal system
Long-run average cost of the perfectly competitive firm includes the
a. cost of raw materials per unit of output. b. opportunity cost of labor per unit of output. c. opportunity cost of capital per unit of output. d. All of the above are correct.
Homeowners receive tax benefits that are not available to renters
a. True b. False Indicate whether the statement is true or false
An annual income of less than $24,000 is
A. Extreme poverty. B. The poverty rate. C. Below the poverty threshold. D. In-kind income.