Consider the following AR and MR curves for a single- price monopolist.
FIGURE 10- 2
-If a single- price monopolist sets price where the price elasticity of demand exactly equals 1,its

Question

Consider the following AR and MR curves for a single- price monopolist.
  FIGURE 10- 2
-If a single- price monopolist sets price where the price elasticity of demand exactly equals 1,its

Quizplus · Accepted Answer

When the price elasticity of demand is exactly 1, the monopolist is charging the price that maximizes total revenue. This can be seen in the graph where the MR curve intersects with the demand curve at the midpoint of the demand curve's slope. At this point, total revenue is maximized and any deviation from this price will result in a decrease in total revenue. Therefore, the correct answer is C.

Consider the Following AR and MR Curves for a Single-