Answer to Question #49410 in Microeconomics for rebecca

Question

Consider a profit maximizing monopolist that employs a uniform pricing strategy. If it were to produce and price at a point on the inelastic segment of its demand curve, then it could:
a) raise total revenue by raising price
b) reduce total costs by raising price
c) raise profits by raising price
d) all of the above

Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. Therefore:
a) demand is elastic at this price
b) demand is inelastic at this price
c) the firm is maximizing profits
d) total revenue is at a maximum

If a monopolist is producing a level of output that maximizes total profit, then it will necessarily be:
a) minimizing total cost
b) maximizing profit per unit of output
c) maximizing total revenue
d) maximizing the difference between total revenue and total cost

Answer 1

1. Consider a profit maximizing monopolist that employs a uniform pricing strategy. If it were to produce and price at a point on the inelastic segment of its demand curve, then it could:
a) raise total revenue by raising price
2. Suppose a pure monopolist is charging a price of $12 and the associated marginal revenue is $9. Therefore:
a) demand is elastic at this price
3. If a monopolist is producing a level of output that maximizes total profit, then it will necessarily be:
d) maximizing the difference between total revenue and total cost