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5. Problems and Applications Q5 Consider the relationship between monopoly pricing and the price elasticity of demand If demand is inelastic and a monopolist raises its price, total revenue would and total cost would .Therefore, a monopolist will produce a quantity at which the demand curve is inelastic 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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Answer #1

If demand is inelastic, .... total revenue will increase and total cost would decrease.

Reason

In inelastic part, by definition revenue rises in response to quantity decrease and total cost decreases if the total quantity will decreases.

Therefore, a monopolist ...will not produce

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