The more inelastic the demand curve for a product is, the:
A) higher is the monopolist's price markup.
B) smaller is the monopolist's price markup.
C) more responsive buyers are to a change in the price.
D) less chance monopolists will have to earn above-normal profits.

Question

Quizplus · Accepted Answer

When the demand curve is inelastic, it means that buyers are not very responsive to a change in the price. This gives the monopolist more power to increase the price without losing too many customers. Therefore, the monopolist can set a higher price markup, which leads to higher profits.

The More Inelastic the Demand Curve for a Product Is