When a Monopolist's Demand Curve Is Inelastic, Raising the Price

question 154

Multiple Choice

When a monopolist's demand curve is inelastic, raising the price:

• A) increases total revenue and increases total cost.
• B) decreases total revenue and increases total cost.
• C) increases total revenue and decreases total cost.
• D) decreases total revenue and decreases total cost.

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Definitions:

Uneconomic Substitution

Involves replacing one factor of production with another in a way that leads to inefficient or increased costs.

Creative Accounting

The manipulation of financial records and reports to give a more favorable image of a company's financial position than is justified.

Regulation

involves the establishment of rules or laws designed to control or govern conduct, typically enacted by a government body.

Natural Monopoly

A market condition where a single firm can supply a good or service to an entire market at a lower cost than what two or more companies could.