To profit maximize, the monopolist should set a higher price in a market with more inelastic demand.

Question

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A monopolist has the power to set the price of their product. In a market with more inelastic demand, consumers are less responsive to changes in price and are willing to pay more for the product. Therefore, the monopolist can set a higher price and still have customers willing to purchase at that price. This will lead to higher profits for the monopolist. In contrast, in a market with more elastic demand, consumers are more responsive to changes in price and may look for alternative products or suppliers if the price is too high. Therefore, the monopolist may have to set a lower price to attract customers, resulting in lower profits.

To Profit Maximize, the Monopolist Should Set a Higher Price