-In the above figure, for a single-price monopolist producing at its profit-maximizing equilibrium price and quantity, the price elasticity of demand at this equilibrium will be
A) greater than 1 and the monopolist's total revenue is maximized.
B) less than 1 and the monopolist's economic profit could be larger.
C) equal to 1 and the monopolist's total revenue is maximized.
D) greater than 1 and the economic profit is maximized but the total revenue is not.

Question

-In the above figure, for a single-price monopolist producing at its profit-maximizing equilibrium price and quantity, the price elasticity of demand at this equilibrium will be
A) greater than 1 and the monopolist's total revenue is maximized. 
B) less than 1 and the monopolist's economic profit could be larger. 
C) equal to 1 and the monopolist's total revenue is maximized. 
D) greater than 1 and the economic profit is maximized but the total revenue is not.

Quizplus · Accepted Answer

At the profit-maximizing equilibrium, a monopolist sets marginal revenue equal to marginal cost, which occurs when the price elasticity of demand is greater than 1 (elastic). This maximizes economic profit, but not necessarily total revenue.

-In the Above Figure, for a Single-Price Monopolist Producing at Its