Under pure monopoly, a profit-maximizing firm will produce
A) in the inelastic range of its demand curve.
B) in the elastic range of its demand curve.
C) only where marginal costs are decreasing.
D) only where marginal revenue is increasing.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will produce in the elastic range of its demand curve because in this range, a decrease in price leads to an increase in total revenue, allowing the firm to maximize profits by equating marginal revenue with marginal cost.

Under Pure Monopoly, a Profit-Maximizing Firm Will Produce