Suppose a monopolist cannot price discriminate.To maximize profit, it will
A)always produce in the inelastic range of its demand curve
B)never produce in the elastic range of its demand curve
C)never produce in the inelastic range of its demand curve
D)never produce in the elastic range of its marginal cost curve
E)produce in the elastic range of the marginal revenue curve

Question

Quizplus · Accepted Answer

In order to maximize profit, the monopolist would need to produce where marginal revenue equals marginal cost. If the monopolist produces in the inelastic range of its demand curve, it would have to charge a higher price and would not sell as many units. If it produces in the elastic range of its demand curve, it would have to charge a lower price and sell more units, but this would decrease its profit margin. Thus, the best option for the monopolist that cannot price discriminate is to produce only in the elastic range of its demand curve and never in the inelastic range.

Suppose a Monopolist Cannot Price Discriminate