Which of the Following Is True About a Monopoly

question 57

Multiple Choice

Which of the following is true about a monopoly?

• A) A monopoly charges a higher price and produces a lower output level than if the market were competitive.
• B) A monopoly is guaranteed an economic profit.
• C) A monopoly charges the highest possible price.
• D) A monopoly will shut down whenever losses are incurred.
• E) All of these.

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Definitions:

Futures Contracts

Agreements for the future delivery of assets like commodities or securities at a price fixed upon the contract's signing.

Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date.

Swap Contracts

Financial agreements between two parties to exchange cash flows or other financial instruments for a specified period of time.

Put Option

A contract in finance that provides the bearer the privilege, but avoids the necessity, to dispense a specific measure of an underlying asset at a particular price during an outlined period.