A monopolist will not produce
A) a positive level of output when its marginal revenue is declining.
B) a positive level of output when its price is less than average total cost but greater than average variable cost.
C) in the inelastic portion of its demand curve, where marginal revenue is negative.
D) in the perfectly competitive level of output when it engages in perfect price discrimination.

Question

Quizplus · Accepted Answer

A monopolist will avoid producing in the inelastic portion of its demand curve because in this range, lowering the price to sell one more unit leads to a decrease in total revenue, as the marginal revenue is negative. This is not profitable for the monopolist.

A Monopolist Will Not Produce