Asked by Sabrina Mitchell on Jul 23, 2024
Verified
Assuming no change in product demand, a pure monopolist
A) can increase price and increase sales simultaneously because it dominates the market.
B) adds an amount to total revenue that is equal to the price of incremental sales.
C) should produce in the range where marginal revenue is negative.
D) must lower price to increase sales.
Pure Monopolist
A market structure wherein a single company or entity has exclusive control over the production and sale of a particular product or service, with no close substitutes.
Marginal Revenue
The additional revenue that a company receives from selling one more unit of a product.
Incremental Sales
The increase in sales generated by a specific action or event, beyond what would normally have been expected.
- Explore how monopolists adapt their strategies to maximize profits amidst different market dynamics.
- Assess the role of barriers to entry in maintaining monopoly power.
Verified Answer
HX
HUANG XINRUIJul 30, 2024
Final Answer :
D
Explanation :
A pure monopolist faces a downward-sloping demand curve, meaning that to sell more units, the price per unit must decrease. This is because, in a monopolistic market, the firm has complete control over the supply of the product but still faces the law of demand: as price decreases, quantity demanded increases. Choices A, B, and C do not accurately describe the behavior or outcomes for a pure monopolist in terms of pricing and sales strategy.
Learning Objectives
- Explore how monopolists adapt their strategies to maximize profits amidst different market dynamics.
- Assess the role of barriers to entry in maintaining monopoly power.