Question

A monopoly will never sell in the inelastic portion of the demand curve, would you agree or disagree? Justify your answer with a graph.

Answer 1

Yes, I agree that a monopoly will never sell in the inelastic portion of the demand curve.

Inelastic demand means the demand is not affected from the change in the price or demand for a product does not increase or decrease with the increase or decrease in its price.

A monopoly will never sell in the inelastic portion of the demand curve because its profit will not maximize in inelastic portion of the demand curve. We can compare average revenue (AR) and marginal revenue (MR) in demand curve. The marginal revenue (MR) is decreeing in inelastic portion of demand curve. The profit is maximizing only if the company is selling at elastic portion of demand curve which we can see from graph two. Where profit is the difference between total revenue (TR) and total cost (TC) and Q is the quantity.