When a monopolist decreases the price of its good,what do consumers do
A)They will not buy the good.
B)They will buy more of the good.
C)They buy less of the good.
D)They will buy the same amount of the good.

Question

Quizplus · Accepted Answer

When a monopolist decreases the price of its good, consumers tend to buy more of the good because it becomes relatively cheaper compared to other substitute goods in the market. This phenomenon is known as the 'price effect' and it can lead to an increase in the monopolist's total revenue. However, the monopolist may also experience a 'quantity effect' where each unit sold generates less profit due to the lower price, thus it is important for the monopolist to carefully consider the trade-off between these effects when setting prices.

When a Monopolist Decreases the Price of Its Good,what Do