Which of the Following Is True About a Monopoly

question 31

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.

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Definitions:

Equity Method

An accounting technique used to record investments in associate companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's net profits or losses.

Patent

A legal right granted by a government authority that gives an inventor exclusive rights to use, make, and sell an invention for a certain period of time.

Significant Influence

The capacity of an investor to participate in the financial and operating policy decisions of an investee but not control those policies.