11. Problems and Applications Q5 Consider the relationship between monopoly pricing and price elasticity of demand. If demand is inelastic and a monopolist raises its price, total revenue would . Therefore, a monopolist will 10 9 8 Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). ? 7 6 5 4 3 2 1 0 -1 -2 -4 -5 0 Demand 1 2 3 4 5 Quantity 6 Marginal Revenue and total cost would produce a quantity at which the demand curve is inelastic. 7 8 9 10 Inelastic Demand. + ,, causing profit to Max TR
11. Problems and Applications Q5 Consider the relationship between monopoly pricing and price elasticity of demand. If demand is inelastic and a monopolist raises its price, total revenue would . Therefore, a monopolist will 10 9 8 Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). ? 7 6 5 4 3 2 1 0 -1 -2 -4 -5 0 Demand 1 2 3 4 5 Quantity 6 Marginal Revenue and total cost would produce a quantity at which the demand curve is inelastic. 7 8 9 10 Inelastic Demand. + ,, causing profit to Max TR
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Monopoly
Section: Chapter Questions
Problem 7PA
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Question
![11. Problems and Applications Q5
Consider the relationship between monopoly pricing and price elasticity of demand.
If demand is inelastic and a monopolist raises its price, total revenue would
Therefore, a monopolist will
10
9
8
7
6
5
Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal-
revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).
(?)
4
1
0
-1
-2
-3
-4
-5
0
Demand
1
2
3
4
5
Quantity
Marginal Revenue
and total cost would
produce a quantity at which the demand curve is inelastic.
6 7 8 9
10
Inelastic Demand
, causing profit to
Max TR](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31237684-89ac-4bee-b96a-aade1094de8c%2F8c032148-b6cc-4379-89f9-406568331474%2Fz9y0yt_processed.png&w=3840&q=75)
Transcribed Image Text:11. Problems and Applications Q5
Consider the relationship between monopoly pricing and price elasticity of demand.
If demand is inelastic and a monopolist raises its price, total revenue would
Therefore, a monopolist will
10
9
8
7
6
5
Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal-
revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).
(?)
4
1
0
-1
-2
-3
-4
-5
0
Demand
1
2
3
4
5
Quantity
Marginal Revenue
and total cost would
produce a quantity at which the demand curve is inelastic.
6 7 8 9
10
Inelastic Demand
, causing profit to
Max TR
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