Which of the following statements is correct?
A) A monopolist's marginal cost is greater than its price.
B) The more inelastic the demand curve is, the greater is the monopolist's price markup.
C) The monopolist's profit is equal to P(Q - MR).
D) The position of the marginal revenue curve on the y-axis reflects consumer demand elasticity.

Question

Quizplus · Accepted Answer

The more inelastic the demand curve, the less responsive consumers are to changes in price. Therefore, a monopolist can charge a higher price markup without losing significant sales. As a result, the monopolist's price markup is greater when the demand curve is more inelastic.

Which of the Following Statements Is Correct