Answer to Question #70417 in Macroeconomics for Nomvuso

Question

Lonewolf Ltd is the sole manufacturer and supplier of solar panels in the country. As a result of this the CEO claimed in a recent meeting that he can set any price he wishes and sell as many units of his product as he wants at that price. Is this correct? Motivate your answer

Answer 1

This is not correct. The quantity of units sold at a certain price is still determined by the demand curve, which has a downward character. At the same time, solar panels are not a basic commodity, so the demand for them is elastic, i.e. with an increase in the price, the quantity of units sold decreases to a greater extent, and the total revenue diminishes.