A simple profit-maximizing monopoly will choose its price and quantity from the elastic portion of its demand curve.

Question

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A profit-maximizing monopoly will set its price and quantity where marginal revenue equals marginal cost. This occurs on the elastic portion of the demand curve, where a decrease in price leads to an increase in total revenue, allowing the monopoly to maximize profits.

A Simple Profit-Maximizing Monopoly Will Choose Its Price and Quantity