A profit maximizing monopolist sets price and output so that it always operates on the elastic portion of its straight-line demand curve when in equilibrium.

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist will operate on the elastic portion of the demand curve because this is where marginal revenue is positive, allowing the firm to increase total revenue by reducing price and increasing output.

A Profit Maximizing Monopolist Sets Price and Output So That