The profit-maximizing monopolist will operate in a price range over which
A) demand is elastic.
B) demand is inelastic.
C) the price elasticity of demand is less than 1.
D) supply is elastic.

Question

Quizplus · Accepted Answer

A monopolist will operate in a price range where demand is elastic because in this range, lowering the price slightly leads to a more than proportional increase in quantity sold, increasing total revenue. In contrast, in the inelastic range, price decreases do not significantly increase quantity sold, and total revenue decreases.

The Profit-Maximizing Monopolist Will Operate in a Price Range Over