For a monopoly,when the price effect outweighs the quantity effect of increased production:
A) total revenues will increase.
B) the demand must be price inelastic.
C) marginal revenue must be increasing.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

When the price effect outweighs the quantity effect of increased production, it means that increasing the price will lead to a greater increase in total revenue than decreasing the quantity produced. This condition requires the demand for the product to be price inelastic, meaning that consumers are not highly responsive to changes in price. Therefore, only option B is correct. Option A is not always true, as total revenue could decrease if the increase in price causes a significant decrease in the quantity demanded. Option C is not necessarily true, as marginal revenue could still be decreasing even if the price effect outweighs the quantity effect.

For a Monopoly,when the Price Effect Outweighs the Quantity Effect