A monopolist will avoid setting a price in the elastic segment of the demand curve and prefer to set the price in the inelastic segment.

Question

Quizplus · Accepted Answer

A monopolist prefers to set a price in the elastic segment of the demand curve because in this segment, lowering the price slightly leads to a proportionally larger increase in quantity sold, which can increase total revenue. In the inelastic segment, price decreases do not lead to enough increase in quantity sold to compensate for the lower price, potentially reducing total revenue.

A Monopolist Will Avoid Setting a Price in the Elastic