A monopolist with a linear demand curve will:
A)not produce in the inelastic portion of its demand curve.
B)produce regardless of elasticity,since it is a monopolist.
C)not produce in the elastic portion of its demand curve.
D)produce only at the unit price-elastic portion of its demand curve.

Question

Quizplus · Accepted Answer

A monopolist with a linear demand curve will produce only in the elastic portion of its demand curve as producing in the inelastic portion would not result in an increase in revenue due to the low price elasticity of demand. Producing in the unit price-elastic portion would result in the optimum level of production as any change in price would result in an equal percentage change in quantity demanded, maximizing revenue for the monopolist.

A Monopolist with a Linear Demand Curve Will