Question

Which of the following statements is correct?

a. monopolies have perfectly inelastic demand for the product sold.
b. because a monopoly is the only firm in the market, its supply curve is the same as the market supply curve.
c. monopolies are guaranteed to earn an economic
d. market demand and the firm's demand are the same for a monopoly.

Answer 1

The correct statement is that monopolies are guaranteed to earn an economic profit.

Step-by-step explanation:

The correct statement from the options provided is: c. monopolies are guaranteed to earn an economic profit.

Monopolies are characterized by having no close substitutes for their products, allowing them to have a significant degree of market power. This enables them to set prices above their marginal cost and earn economic profits.

On the other hand, options a, b, and d are incorrect. Monopolies do not have perfectly inelastic demand (option a), their supply curve is not the same as the market supply curve (option b), and the market demand and firm's demand are not the same for a monopoly (option d).