Which of the following is true for a monopolist?
A)Marginal revenue is maximized where demand is unit elastic.
B)Total revenue is maximized where demand is inelastic.
C)Marginal revenue is negative where demand is inelastic.
D)Total revenue is negative where demand is elastic.
E)Marginal revenue is lowest where demand is unit elastic.

Question

Quizplus · Accepted Answer

Marginal revenue becomes negative when demand is inelastic because, in this region, lowering the price to sell one more unit leads to a decrease in total revenue. This is due to the price effect outweighing the quantity effect in the inelastic portion of the demand curve.

Which of the Following Is True for a Monopolist