To maximise its profit, a monopoly should choose a price where demand is:
A) unitary elastic.
B) inelastic.
C) elastic.
D) vertical.

Question

Quizplus · Accepted Answer

A monopoly maximizes profit by producing at a quantity where marginal revenue equals marginal cost, which occurs in the elastic portion of the demand curve. In this region, lowering the price increases total revenue, allowing the monopoly to maximize profit.

To Maximise Its Profit, a Monopoly Should Choose a Price