Join the growing community of curious minds on IDNLearn.com. Join our Q&A platform to access reliable and detailed answers from experts in various fields.
Assuming no change in product demand, a pure monopolist:
A) can increase the price and increase sales simultaneously because it dominates the market.
B) adds an amount to total revenue which 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.
Answer:
D) must lower price to increase sales.
Explanation:
Assuming no change in product demand, a pure monopolist "must lower price to increase sales."
This is because there is a downward‐sloping market demand curve for pure monopolists which translates to when the price of a specific commodity is reduced, then the demanded starts growing.
Hence, it is believed that when the price is reduced consumers tend to have an extra income to make more purchases on a particular commodity, such that they buy more of it.