. Advertisement .
..3..
Consider the relationship between monopoly pricing and price elasticity of demand.
If demand is inelastic and a monopolist raises its price, total revenue would ______▼ and total cost would ______▼ causing profit to . Therefore, a monopolist will _____▼ produce a quantity at which the demand curve is inelastic.
Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is elastic. (Hint: The answer is related to the marginal-revenue (MR) curve). Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).
......... ADVERTISEMENT .........
..8..
♦ Relevant knowledge
. Advertisement .
..4..
It is a model where there is one seller and a large quantity of buyers. In contrast to a market that is completely competitive, there are barriers to entering and exit from the market. Since monopolists are the only sellers on an industry, a market monopolist is able to charge prices above the cost of marginal. Equilibrium is the process of comparing marginal revenue to the marginal cost.
1 Answer