When a monopolist's demand curve is inelastic, raising the price:
A) increases total revenue and increases total cost.
B) decreases total revenue and increases total cost.
C) increases total revenue and decreases total cost.
D) decreases total revenue and decreases total cost.

Question

Quizplus · Accepted Answer

When a monopolist's demand curve is inelastic, raising the price increases total revenue because the increase in price more than offsets the decrease in quantity demanded. Total cost does not change because the monopolist is not producing more output.

When a Monopolist's Demand Curve Is Inelastic, Raising the Price