A nondiscriminating profit maximizing monopolist

10. A nondiscriminating profit-maximizing monopolist: A. will never produce in the output range where marginal revenue is positive. B. will never produce in the output range where demand is inelastic.correct C. will never produce in the output range where demand is elastic. D. may produce where demand is either elastic or inelastic, depending on the level of production costs. Why is it B?

Answer

B. will never produce in the output range where demand is inelastic. monopolist will never choose to operate where the demand is inelastic. if elsticity (E) is less than 1,then 1/E >1 marginal revenue { MR=p(1+(1/E))    }   will be negative , so it can’t be possibly equal Marginal cost.

for equilibrium requirement is MR=MC, which is not be possible in inelastic demand curve

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