Assume that a monopolist faces a linear demand curve. If the firm is operating at an output level where marginal revenue is positive, the firm
A) has maximized total revenues.
B) could raise revenues by raising prices.
C) can always increase profits by lowering its price.
D) is operating on the elastic portion of its demand curve.

Question

Quizplus · Accepted Answer

When marginal revenue is positive, the firm is operating on the elastic portion of its demand curve, where a decrease in price leads to an increase in total revenue.

Assume That a Monopolist Faces a Linear Demand Curve