Assuming no change in product demand, a pure monopolist
A) can increase price and increase sales simultaneously because it dominates the market.
B) adds an amount to total revenue that is equal to the price of incremental sales.
C) should produce in the range where marginal revenue is negative.
D) must lower price to increase sales.

Question

Quizplus · Accepted Answer

A pure monopolist must lower price to increase sales because it is the only supplier in the market and consumers have no substitute options. Therefore, a higher price will deter some customers from purchasing the product, while a lower price will attract more customers without losing existing ones. This is known as the downward sloping demand curve for a monopolist, and it leads to the optimal output level determined by where marginal cost equals marginal revenue.

Assuming No Change in Product Demand, a Pure Monopolist