If a monopolist is producing a rate of output at which market demand is inelastic,
A)it may or may not be maximizing its short-run profit
B)reducing output would reduce both total revenue and total cost
C)reducing output would increase both total revenue and total cost
D)reducing output would increase total revenue and reduce total cost
E)increasing output will increase its short-run economic profit

Question

Quizplus · Accepted Answer

When demand is inelastic, reducing output increases total revenue because consumers are less sensitive to price changes, and it reduces total cost due to producing fewer units.

If a Monopolist Is Producing a Rate of Output at Which