If demand is inelastic and a monopolist raises its price, quantity would fall by a Z. Therefore, a monopolist will percentage than the rise in price, causing profit to produce a quantity at which the demand curve is elastic. 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).

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Chapter1: Making Economics Decisions
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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
. Therefore, a monopolist will
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).
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
0
Demand
1
2
3
4
5
Quantity
Marginal Revenue
percentage than the rise in price, causing profit to
produce a quantity at which the demand curve is elastic.
6 7
8 9 10
Inelastic Demand
+
Max TR
Transcribed Image Text: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 . Therefore, a monopolist will 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). 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 0 Demand 1 2 3 4 5 Quantity Marginal Revenue percentage than the rise in price, causing profit to produce a quantity at which the demand curve is elastic. 6 7 8 9 10 Inelastic Demand + Max TR
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