Suppose it costs Minnie's Mini-Golf (a monopolist)not a penny more to let another person on the course.If Minnie's faces a linear (downward-sloping)market demand curve, it will maximize profit by choosing the point on the demand curve at which
A)marginal revenue is greatest
B)price elasticity is unit elastic
C)price elasticity is inelastic
D)price exceeds average total cost by the greatest amount
E)price exceeds marginal cost by the greatest amount

Question

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal revenue equals marginal cost. For a linear demand curve, this occurs where the price elasticity of demand is unit elastic.

Suppose It Costs Minnie's Mini-Golf (A Monopolist)not a Penny More