If a monopolist finds itself operating in the inelastic portion of its demand curve, then it should never lower its price because doing so would reduce its profits.

Question

Quizplus · Accepted Answer

In the inelastic portion of the demand curve, lowering the price would lead to a less than proportional increase in quantity demanded, thus reducing total revenue and profits for a monopolist.

If a Monopolist Finds Itself Operating in the Inelastic Portion