Will a monopoly always produce at a profit-maximizing level of output?

Question

Will a monopoly always produce at a profit-maximizing level of output?

Answer 1

mr=mc and then go to the downward slopping demand curve.

Answer 2

Not always...  Take a look at Standard Oil when it had a monopoly versus when the monopoly was broken up.

Answer 3

Only if it can practice price discrimination.

Answer 4

Yes, a monopoly is only driven by trying to maximize its profits so it would always produce at that quantitiy.  There is no incentive not to, since there is no competition.  Produce too little and you miss out on profit and if you produce too much your MC outweighs the MR.

On the side, if a monopoly can more efficiently produce what is produced in a competitive market (lower production costs due to economies of scale) then even when it produces its maximizing-profit output the selling price will be lower than that of the competitive market.  That is the alternative view on monopolies that few people ever hear especially without an economics class.

Answer 5

Yes. But there are really very few monopolies in existence, so it's a pretty academic question. Without government enforcement it's hard to maintain a monopoly. Even the US Postal Service is finding it hard.