If total revenue falls by $5 when a monopolist sells an additional unit,you can conclude that the monopolist:
A)does not have pricing power.
B)is not maximizing profits.
C)is producing on the elastic portion of the demand curve.
D)faces a horizontal demand curve.

Question

Quizplus · Accepted Answer

When total revenue decreases as a result of selling an additional unit, it indicates that the monopolist is producing on the inelastic portion of the demand curve, where marginal revenue is negative. This suggests that the monopolist is not maximizing profits, as they should produce where marginal revenue equals marginal cost.

If Total Revenue Falls by $5 When a Monopolist Sells