If a pure monopolist is operating in a range of output where demand is elastic,
A) it cannot possibly be maximizing profits.
B) marginal revenue will be positive but declining.
C) marginal revenue will be positive and rising.
D) total revenue will be declining.

Question

Quizplus · Accepted Answer

When demand is elastic, the pure monopolist has to lower the price in order to increase the quantity sold. As a result, marginal revenue will be positive but declining. In this situation, the monopolist can increase total revenue by increasing output, so it is not maximizing profits at the current level of output.

If a Pure Monopolist Is Operating in a Range of Output