If a monopoly wants to maximize its profit,it should produce in the range where
A)its average costs are declining.
B)its demand curve is elastic.
C)its marginal costs are declining.
D)its marginal costs are less than its average costs.

Question

Quizplus · Accepted Answer

To maximize profits, a monopoly should operate where its demand curve is elastic because in this range, lowering the price slightly increases the quantity sold by a larger percentage, thereby increasing total revenue. In the elastic range, consumers are more responsive to price changes, allowing the monopoly to adjust prices to maximize profits.

If a Monopoly Wants to Maximize Its Profit,it Should Produce