A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to
A)-3.
B)-1.
C)-1/3.
D)None of the above-the price elasticity does not matter.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will not operate where the price elasticity of demand is less than 1 (inelastic), such as -1/3, because reducing output and raising price would increase total revenue and profit.

A Profit-Maximizing Monopolist Will Never Operate in the Portion of the Demand