Monopolists that produce products with very elastic demand tend to have the highest price markups.

Question

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Monopolists that produce products with elastic demand face more competitive pressure from substitutes and therefore have less market power to raise prices. As a result, they tend to have lower price markups. In contrast, monopolists that produce products with inelastic demand face less competition and can charge higher prices, resulting in higher price markups.

Monopolists That Produce Products with Very Elastic Demand Tend to Have