If Microsoft is a monopoly and currently charges prices where its demand is elastic,then Microsoft's marginal revenue is
A) negative.
B) positive.
C) zero.
D) minimized.
E) undefined.

Question

Quizplus · Accepted Answer

If Microsoft is a monopoly and faces an elastic demand curve, then it knows that decreasing its price will increase total revenue. In this case, marginal revenue (the additional revenue gained from selling one more unit) will be positive. If Microsoft were to charge a price where its demand is inelastic, then it would have a less responsive increase in revenue with each additional unit sold and could potentially have a negative marginal revenue.

If Microsoft Is a Monopoly and Currently Charges Prices Where