If a profit-maximizing monopolist is currently operating on the inelastic region of its demand curve, it should:
A)increase price and decrease output.
B)decrease both price and output.
C)increase both price and output.
D)decrease price and increase output.
E)decrease price while keeping output constant.

Question

Quizplus · Accepted Answer

If the monopolist is currently operating on the inelastic region of its demand curve, it means that a change in price will not significantly affect the quantity demanded. Therefore, the monopolist should increase the price and decrease the output to maximize its profit. By increasing the price, the marginal revenue will also increase, and the marginal cost will decrease due to the decrease in output. As a result, the monopolist can increase its profit.

If a Profit-Maximizing Monopolist Is Currently Operating on the Inelastic