Price Elasticity of Demands
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If a monopolist is producing a level of output at which demand is inelastic, the firm is not maximizing profits, and increasing output will decrease total revenue.
True or False?
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Price elasticity of demand is featured.
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TRUE (but there may be exceptions).
There are several bits of information to be weeded out of the above statement.
First we want to distinguish between profit and revenue. Profit is TR - TC and TR is P*Q.
Second, all firms seek to maximize profit. They do this by setting MR=MC. It may be the case that MR=MC ...
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