Which of the Following Is True of Pure Monopolies

question 47

Multiple Choice

Which of the following is true of pure monopolies?

• A) Monopolies earn positive economic profits in the long run.
• B) Monopolies produce output that is greater than the competitive level.
• C) Monopolies produce products that have a negligible marginal cost but a high fixed cost.
• D) Monopolies reduce welfare by engaging in excessive product differentiation.
• E) Answers monopolies earn positive economic profits in the long run and monopolies reduce welfare by engaging in excessive product differentiation are both correct.

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Definitions:

Recorded Equity

The total amount of owners' equity recorded in the financial statements, representing the residual interest in the assets of a company after deducting liabilities.