Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve.If the monopolist is seeking maximum profits, it should
A)retain its current price-quantity combination.
B)increase both price and quantity sold.
C)charge a lower price.
D)charge a higher price.

Question

Quizplus · Accepted Answer

When a monopolist is on the inelastic segment of the demand curve, increasing the price will increase total revenue and potentially profits, as the percentage drop in quantity demanded will be less than the percentage increase in price.

Assume a Pure Monopolist Is Currently Operating at a Price-Quantity