For a monopolist with a downward-sloping demand curve,the quantity effect is MOST likely to dominate the price effect at:
A)low levels of production.
B)all levels of production.
C)high levels of production.
D)levels at which elasticity is unit-elastic.

Question

Quizplus · Accepted Answer

At low levels of production, the monopolist has a limited supply, which means that if the price increases, the quantity demanded will not decrease significantly. As a result, the quantity effect dominates the price effect, and the monopolist can increase the price without losing many customers.

For a Monopolist with a Downward-Sloping Demand Curve,the Quantity Effect