Whether a monopolist is able to increase his revenue by restricting his output depends on the shape of the_________
- marginal product
- marginal cost curve
-
demand curve
- average cost curve
The correct answer is: C
Explanation
A monopolist can either decide his output or the price at which he will sell, but not both. A monopolist must consider elasticity of demand, since his aim is to produce the output that will yield him maximum profit.
If the demand curve is elastic, he will decrease his price and if it is inelastic, he will increase his price in order to earn revenue.