If a pure monopolist is operating in a range of output where demand is elastic,
A)it cannot possibly be maximizing profits.
B)marginal revenue will be positive but declining.
C)marginal revenue will be positive and rising.
D)total revenue will be declining.

Question

Quizplus · Accepted Answer

When demand is elastic, lowering the price increases total revenue, and since marginal revenue is the change in total revenue from selling one more unit, it will be positive. However, as output increases, the price must be lowered to sell additional units, leading to a decline in marginal revenue.

If a Pure Monopolist Is Operating in a Range of Output