Say that a monopolist is currently operating on the inelastic region of its demand curve.To maximize its profits,it should:
A) raise its prices.
B) lower its prices.
C) maintain its current price.
D) either raise or lower its prices, depending on how high its marginal cost curve is.

Question

Quizplus · Accepted Answer

Since the monopolist is operating on the inelastic portion of the demand curve, a price increase will lead to a relatively smaller decrease in quantity demanded compared to the increase in price. As a result, the total revenue (price x quantity) will increase and the monopolist will be able to maximize its profits by raising its prices.

Say That a Monopolist Is Currently Operating on the Inelastic