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Author Question: Why would a monopolist never price in the inelastic portion of the demand curve? What will be an ... (Read 73 times)

rlane42

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on: Jun 29, 2018
Why would a monopolist never price in the inelastic portion of the demand curve?
 
  What will be an ideal response?

Question 2

If some sellers exit a competitive market, how will this affect its equilibrium?
 
  What will be an ideal response?


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Fayaz00962

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Pricing in the inelastic portion of the demand curve would result in negative marginal revenue which would reduce total revenue and profits as well.

Answer to Question 2

The market supply curve in a competitive market is a horizontal summation of individual supply curves. As a result, when some sellers exit the market, the market supply curve will shift to the left. With demand remaining unchanged, this will increase the equilibrium price and reduce the equilibrium quantity sold.


rlane42

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Reply 2 on: Jun 29, 2018
Excellent

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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