In the inelastic portion of a monopolist's demand curve, an increase in price will
A)reduce output quantity, increase total revenue, and increase total cost.
B)reduce output quantity, increase total revenue, and decrease total cost.
C)raise output quantity, decrease total revenue, and increase total cost.
D)reduce output quantity, decrease total revenue, and decrease total cost.

Question

Quizplus · Accepted Answer

In the inelastic portion of a monopolist's demand curve, an increase in price leads to a less than proportionate decrease in quantity demanded. This results in an increase in total revenue (price effect outweighs the quantity effect) and a decrease in total cost (since less is being produced).

In the Inelastic Portion of a Monopolist's Demand Curve, an Increase