Asked by DeAndra Kelly on Jun 10, 2024
Verified
As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.
Total Revenue
The overall amount of money generated by a business from selling its goods or services before any costs are subtracted.
- Understand the elasticity of the monopolist’s demand curve and its implications for pricing and revenue.
Verified Answer
DK
Destiny KerstJun 14, 2024
Final Answer :
True
Explanation :
This is because, initially, the increase in quantity sold due to the price decrease can more than offset the lower price, raising total revenue. However, beyond a certain point, further price decreases lead to a smaller increase in quantity sold that does not compensate for the lower price, causing total revenue to decrease.
Learning Objectives
- Understand the elasticity of the monopolist’s demand curve and its implications for pricing and revenue.