Final answer:
The incorrect statement about a profit-maximizing monopolist is that 'The monopolist always earns an economic profit.' While monopolists can earn high profits due to the lack of competition, there's no guarantee for sustained economic profits. Therefore, the correct option is b.
Step-by-step explanation:
The question pertains to the characteristics of a profit-maximizing monopolist. Among the statements provided, the one that is NOT correct is that the monopolist always earns an economic profit. This is incorrect because while a monopolist has the potential to earn positive economic profits due to the lack of competition, it is not guaranteed, as profits depend on various factors including cost structures and the level of demand.
Specifically:
- a. The monopolist faces a downward-sloping market demand curve.
- c. The price of output exceeds marginal revenue.
- d. The monopolist chooses output where marginal revenue (MR) equals marginal cost (MC).
However, statement b. 'The monopolist always earns an economic profit' is not correct, as there is no guarantee of sustained economic profits, especially if average costs are high or demand decreases. The monopolist seeks the profit-maximizing quantity where MR = MC, and charges a price determined by the market demand curve. If the price is above average cost, then the monopolist will earn a profit; if it is not, the monopolist could break even or incur losses.