Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should
A)retain its current price-quantity combination.
B)increase both price and quantity sold.
C)charge a lower price.
D)charge a higher price.

Question

Quizplus · Accepted Answer

When operating on the inelastic segment of the demand curve, increasing the price will lead to a less-than-proportional decrease in quantity sold, thus increasing total revenue and potentially profits, assuming costs do not increase disproportionately.

Assume a Pure Monopolist Is Currently Operating at a Price-Quantity