If a monopolist had no production costs, it would produce the output where marginal revenue intersects the quantity axis. At this point, the price elasticity of demand would be:
A) 1.
B) perfectly inelastic.
C) zero.
D) perfectly elastic.

Question

Quizplus · Accepted Answer

When a monopolist has no production costs, it maximizes profit by producing where marginal revenue is zero, which occurs where the price elasticity of demand is equal to 1 (unit elastic).

If a Monopolist Had No Production Costs, It Would Produce