The figures given below represent the revenue curves of a monopolist.Figure 11.2
TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
-Refer to Figure 11.2. If the monopolist is selling a quantity between B and E,then to maximize total revenue, the monopolist should:
A)increase price because it is operating on the elastic portion of the demand curve.
B)decrease price because it is operating on the elastic portion of the demand curve.
C)increase price because it is operating on the inelastic portion of the demand curve.
D)decrease price because it is operating on the inelastic portion of the demand curve.
E)increase price because it is operating at the point at which price elasticity of demand is greater than 1.

Question

The figures given below represent the revenue curves of a monopolist.Figure 11.2
  TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
-Refer to Figure 11.2. If the monopolist is selling a quantity between B and E,then to maximize total revenue, the monopolist should:
A)increase price because it is operating on the elastic portion of the demand curve. 
B)decrease price because it is operating on the elastic portion of the demand curve. 
C)increase price because it is operating on the inelastic portion of the demand curve. 
D)decrease price because it is operating on the inelastic portion of the demand curve. 
E)increase price because it is operating at the point at which price elasticity of demand is greater than 1.

Quizplus · Accepted Answer

The monopolist is operating on the inelastic portion of the demand curve, so increasing price will increase total revenue.

The Figures Given Below Represent the Revenue Curves of a Monopolist.Figure