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Title: In a recent court case, an expert witness defined a monopoly as a firm that can "raise price ... Post by: Llanis on Oct 18, 2017 In a recent court case, an expert witness defined a monopoly as a firm that can "raise price without reducing its total revenue." What does this imply about the elasticity of demand? Would this definition hold for a profit-maximizing monopoly? Explain.
Title: Re: In a recent court case, an expert witness defined a monopoly as a firm that can "raise ... Post by: Tyforumca on Oct 18, 2017 If the firm raises price, the quantity sold will decrease. If total revenue is not reduced by this, then marginal revenue is not positive. This implies demand either is price inelastic or has unitary elasticity. This would not hold for a profit-maximizing monopoly. A profit maximizer sets MR = MC. This definition implies that MR is zero or negative, and MC cannot be negative.
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