The more inelastic the demand curve, a monopoly will
A)have a smaller Lerner Index.
B)face a lower marginal cost.
C)earn less profit.
D)lose fewer sales as it raises its price.

Question

Quizplus · Accepted Answer

The more inelastic the demand curve, the less sensitive consumers are to price changes, meaning a monopoly can raise prices without losing many sales. This is because inelastic demand indicates that consumers do not have close substitutes and are less likely to reduce their quantity demanded significantly in response to price increases.

The More Inelastic the Demand Curve, a Monopoly Will