A monopolist produces in the elastic segment of its demand curve because when it lowers the price
A) the percentage change increase in quantity demanded is greater than the percentage change decrease in price and total revenue increases.
B) the percentage change increase in quantity demanded is less than the percentage change decrease in price and total revenue increases.
C) the percentage change increase in quantity demanded is greater than the percentage change decrease in price and total revenue decreases.
D) the percentage change decrease in quantity demanded is less than the percentage change decrease in price and total revenue increases.

Question

Quizplus · Accepted Answer

In the elastic segment of the demand curve, the percentage change in quantity demanded is greater than the percentage change in price. As a result, when the monopolist lowers the price, more consumers will purchase the good, and total revenue will increase.

A Monopolist Produces in the Elastic Segment of Its Demand