If the demand for its product is inelastic, a monopoly's
A. marginal revenue is negative.
B. total revenue is unchanged when the firm lowers its price.
C. total revenue increases when the firm lowers its price.
D. marginal revenue is equal to zero.
Marginal Revenue means the revenue of the last unit produced and sold. Profit is maximized where marginal revenue MR equals marginal cost MC. If MC exceeds marginal revenue, then the marginal unit should not be produced.
Answer and Explanation: 1
If the demand for its product is inelastic, a monopoly's A. marginal revenue is negative.
If the demand is inelastic, then raising the price will...
See full answer below.
Become a member and unlock all Study Answers
Start today. Try it nowCreate an account
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
fromChapter 7 / Lesson 2
Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.