Final answer:
A profit-maximizing monopolist causes shortages by setting higher prices, chooses output where MR equals MC, and always charges above the marginal cost. They determine prices using the market demand curve to ensure profits.
Step-by-step explanation:
A single-priced, profit-maximizing monopolist usually causes shortages by selling fewer units of a product than what is desired if the product were priced at marginal cost. This monopolist chooses the output level where marginal revenue (MR) equals marginal cost (MC), not where marginal revenue begins to increase. Additionally, a monopolist typically charges a price above the marginal cost of production, because this is where their profits are maximized. The statement about maximizing marginal revenue alone is incorrect, as a monopolist maximizes profit where MR equals MC, not just MR in isolation. Therefore, the correct statement is that a monopolist always charges a price above the marginal cost of production.
The decision of output and price by the monopolist is a strategic one. They select the profit-maximizing level of output where MR equals MC. Then, they set the price for that quantity of output as determined by the market demand curve. This price is typically above the average cost, allowing the monopolist to earn positive profits.