Question

why is it that a monopoly optimum is always found in an elastic portion of the...

why is it that a monopoly optimum is always found in an elastic portion of the demand curve?

Homework Answers

Answer #1

A monopoly optimum will always get to operate in the elastic portion of the demand curve and this is because of the fact that in the inelastic portion, the profit rises with increase in prices and therefore the price will be increased continuously until it reaches an optimum which would at the elastic portion after which increase in price would cause decrease in revenue. Therefore, a monopoly optimum will always be found at the elastic portion of the demand curve.

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