Use the following to answer question(s): Computing Monopoly Profit

-(Exhibit: Computing Monopoly Profit) At point E, the price elasticity of demand is:
A) equal to 1.
B) in the elastic range.
C) in the inelastic range, and if price falls, total revenue will increase.
D) in the inelastic range, and if price rises, so will total revenue.

Question

Use the following to answer question(s): Computing Monopoly Profit
 
-(Exhibit: Computing Monopoly Profit) At point E, the price elasticity of demand is:
A) equal to 1. 
B) in the elastic range. 
C) in the inelastic range, and if price falls, total revenue will increase. 
D) in the inelastic range, and if price rises, so will total revenue.

Quizplus · Accepted Answer

At point E, the price elasticity of demand is greater than 1, indicating that demand is elastic. If the price falls, the quantity demanded will increase by a greater proportion, and total revenue will increase. If the price rises, the quantity demanded will decrease by a greater proportion, and total revenue will decrease.

Use the Following to Answer Question(s): Computing Monopoly Profit