To induce an increase in the quantity demanded of its product, a monopolist must reduce the
A) quality of its product and thereby generate a downward shift its ATC curve.
B) price of its product and thereby generate a rightward shift in its demand curve.
C) price of its product and thereby generate a rightward movement along its demand curve.
D) quality of its product and thereby generate a downward movement along its ATC curve.

Question

Quizplus · Accepted Answer

In order to induce an increase in quantity demanded, the monopolist must decrease the price of its product, leading to a movement along the demand curve. This is the only option that correctly identifies this concept. A reduction in product quality may actually decrease the quantity demanded, while a shift in the ATC curve would not necessarily lead to an increase in quantity demanded.

To Induce an Increase in the Quantity Demanded of Its