If a monopolist knows its price elasticity of demand is greater than one,then a(n)_____ in price will _____ total revenue.
A)increase;increase
B)decrease;increase
C)decrease;decrease
D)increase;not change

Question

Quizplus · Accepted Answer

If the price elasticity of demand is greater than one, then a decrease in price will lead to a proportionately larger increase in quantity demanded, resulting in an increase in total revenue for the monopolist. Conversely, an increase in price would lead to a proportionately larger decrease in quantity demanded, resulting in a decrease in total revenue. Therefore, choice B is correct.

If a Monopolist Knows Its Price Elasticity of Demand Is