Question

In the case of pure monopoly:

a. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue
b. one firm is the sole producer of a good or service which has no close substitutes
c. a, b, and c
d. the demand curve is always elastic
e. a and b only

Answer 1

e. a and b only

A and B both statements are correct, because in a monopoly in order to maximize profits a firm will have to produce the amount of output at which its marginal costs = to its marginal revenues, by doing this the firm is able to maximize its profit. Also it is a basic and necessary characteristic of a monopoly that in a pure monopoly only one firm is in the market or industry and is the sole producer.

Step-by-step explanation: