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Suppose an industry is monopolized, and the demand for the product sold by the firm is...

Suppose an industry is monopolized, and the demand for the product sold by the firm is given by: Q = 800 ‒ 2P. At what price range should the monopoly firm raise the price in order to increase revenues?

at prices greater than $200
at prices greater than $100
at prices greater than $400
at prices less than $200
at prices less than $100
at prices less than $400
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Answer #1

Solution: a price less than $400

Explanation: The demand would be inelastic when price is $400 i.e.

dq/dp = - 2/800P

dq/dp = -1/400 * 400 = -1

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