Question

If a business who is a monopolist (single seller) increases the price of its product, its...

If a business who is a monopolist (single seller) increases the price of its product,

its revenue will decrease if the demand for its product is inelastic

its revenue will increase if the demand for its product is inelastic

its revenue will decrease if the demand for its product is inelastic

None of the above
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Answer #1

Ans: its revenue will increase if the demand for its product is inelastic.

Explanation:

When demand is inelastic , then decrease in price will lead a decrease in total revenue. But when demand is inelastic , then increase in price will lead an increase in total revenue.

On the other hand, when demand is elastic , then decrease in price will lead an increase in total revenue. But when demand is elastic , then increase in price will lead a decrease in total revenue.

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