Question

Which statement is correct? In the short run, the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest. Pure monopolists do not always realize economic profits. Because of its ability to administer prices, the pure monopolist can increase its price and increase its volume of sales simultaneously. In the short run, the pure monopolist will charge the highest price it can get for its product.

Answer 1

Answer: Pure monopolists do not always realize economic profits.

Explanation:

Even though Pure Monopolies are the only sellers or makers of a good in a market and can therefore set their own prices, this does not mean that they will always make a profit talk more an economic one.

In the short run for instance, a Pure monopoly could see its average cost higher than its average revenue because some factors of production could not be varied. In this scenario, the monopolist would realize economic losses.