Question

Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist_____its price, quantity would fall by a percentage than the rise in price, causing profit to_______. Therefore, a monopolist will_______produce a quantity at which the demand curve is elastic.

Answer 1

Answer:

raises;larger;decrease;always.

Explanation:

Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, quantity would fall by a larger percentage than the rise in price, causing profit to decrease. Therefore, a monopolist will always produce a quantity at which the demand curve is elastic because he or she will be maximizing profits.

A monopolistic market is a type of market structure that is typically characterized by a single supplier or seller of a particular product without any competition from any other in the market. The features of a monopolistic market are;

- Single seller.

- Profit maximizer.

- Price maker.

- High barriers to entry for others.

- Price discrimination.

- No close substitutes or competition.