The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolist always produces on the elastic portion of the demand curve.

Question

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolist always produces on the elastic portion of the demand curve.

Quizplus · Accepted Answer

A monopolist produces on the elastic portion of the demand curve because in this region, lowering the price leads to an increase in total revenue, which is beneficial for maximizing profits. Producing on the inelastic portion would mean that lowering prices would decrease total revenue, which is not desirable for a profit-maximizing monopolist.

The Figure Given Below Shows the Cost and Revenue Curves