If a monopolist had no costs, its best possible price would be where demand is
A)infinitely elastic.
B)relatively (but not perfectly) elastic.
C)unit elastic.
D)relatively (but not completely) inelastic.

Question

Quizplus · Accepted Answer

A monopolist with no costs would maximize profit where marginal revenue equals zero, which occurs where demand is unit elastic. This is because at the point of unit elasticity, total revenue is maximized, and with no costs, maximizing total revenue directly translates to maximizing profit.

If a Monopolist Had No Costs, Its Best Possible Price