If a Monopoly Operated in the Inelastic Range of Its

question 1

Multiple Choice

If a monopoly operated in the inelastic range of its linear demand curve,

• A) it would be operating at its profit- maximizing position.
• B) it would be operating where its AR is negative.
• C) its marginal revenue would be negative although its total revenues would be at a maximum.
• D) it could raise its total revenue by lowering its price.
• E) its marginal revenue would be negative.

---

Definitions:

Direct Method

In cash flow reporting, this accounting method lists major cash inflows and outflows directly, showing the exact sources and uses of cash during the reporting period.

Gain on Sale

The financial benefit realized when selling an asset for more than its book value or cost basis.

Operating Activities

Activities directly related to the day-to-day operations of a business, including revenue and expense transactions affecting net income.

Operating Activities

Activities that relate directly to the primary operations of the company, such as manufacturing, distributing, marketing, and selling a product or service.