The monopolist should NEVER produce in the
A) elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price.
B) inelastic segment of its demand curve because further lowering of the price reduces total revenue.
C) range of output for which the price elasticity of demand is infinity.
D) range of output for which there is a price elasticity exceeding one.
Answer: B
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Total profit equals
a. TR ? TC. b. average profit times total output. c. total sales revenue minus total cost. d. All of the above are correct.
AutoCorp is a reputed automobile manufacturer while SUVmart is an independent distributor who buys automobiles from the former. During the current year, SUVmart wants to buy its quota of 250 Rhinos from AutoCorp. For the quota system to work efficiently, AutoCorp must commit credibly to the:
A. retail price. B. double markup. C. exclusive territory. D. wholesale price.