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Evaluate this statement: “If I am producing on the inelastic portion of demand, then I know...

Evaluate this statement:

“If I am producing on the inelastic portion of demand, then I know that I am not maximizing profits. To maximize profits I must increase my quantity.”


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Answer #1

The given statement is false and this is because, demand curve the upper portion is elastic in nature and the lower portion is inelastic in nature and in order to maximize the profit you have to operate in the elastic portion of the demand curve and when you are in the inelastic portion you will not maximize your profits and in order to maximize your profit you have to reduce your quantities so that you would move upwards to the elastic portion but not increase your quantity which would for the lead you to more inelastic region

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