A monopolist's profit maximizing price depends upon
A) The elasticity of demand
B) Level of demand
C) The elasticity of supply
D) The level of supply

Question

Quizplus · Accepted Answer

A monopolist's profit maximizing price depends upon the elasticity of demand. If demand is relatively inelastic, the monopolist has more pricing power and can charge a higher price. If demand is relatively elastic, the monopolist must lower the price to sell more units and maximize profits. Therefore, the elasticity of demand is the most important factor in determining the monopolist's price.

A Monopolist's Profit Maximizing Price Depends Upon