The Elasticity Rule for Monopoly Pricing States That a Monopolist

question 13

Multiple Choice

The Elasticity Rule for Monopoly Pricing states that a monopolist should never price a commodity on the portion of the demand curve, which is

• A) downward sloping
• B) inelastic
• C) elastic

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Definitions:

Joint Cost

Costs that are incurred in producing multiple products prior to the point at which the products become separately identifiable.

Split-off Point

The stage in a process at which various products become separately identifiable and their costs can be separately assigned.

Joint Products

Two or more products that are produced from a common input.

Special Order

A one-time order that is not considered part of the company’s normal ongoing business.