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Consider the relationship between monopoly pricing and price elasticity of demand.a. Explain why a monopolist will never produce a quantity at which the demand curve is inelastic. ($Hint$: If demand is inelastic and the firm raises its price, what happens to total revenue and totalcosts?)b. Draw a diagram for a monopolist, precisely labeling the portion of the demand curve that is inelastic. ($Hint$: The answer is related to the marginal-revenue curve.)c. On your diagram, show the quantity and price that maximize total revenue.

a) See answerb) See answerc) See answer

03:07

Jesse N.

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So while seeing the question learns for the move to the answer. So let's see here that the first one is when demanded in the last day are decreasing price actually reduces the are in spite of that increased unit cells. That's a modest negative and the form will never produce where a modest negative. So when demand curve is inelastic and matt is negative, he had his decreasing. So let's move to the second point graph of monopoly showing alas taken in elastic portion of demand occur. Mhm. So let's see here that the graph is. So here is why access and ex access And on the x. axis of zero and quantity. And on the second graf also here is Y axis and ex access and on the X. Axis is quantity and on this side this side is cost and revenue. So on the first draft we're going to product er curve. So let's see here that so this is A P. R. And on the second graf we are going to product A. R. And M. R. Line. So let's see here that so here is price and here is quantity. So this is our line and now we are going to broader M. R. And this is M. R. And we draw the line which connects tr to the A. R. N. M. R. Well let's see here that from here to here it is relatively elastic and from here to here it is relatively in elastic and this Linus unit elastic and this point is marked as a So here is a photograph. So let's move forward to the 3rd point. So the point where M. R. Equals zero is the point of maximized tear. In other words we're prized elasticity of demand is unit elastic. The M. R. E. Zero anti R. Is act its maximum on the graph point represent the maximum pr the prices be and the quantity is cure. So here is the three points which are given in the question for the first point is when demand is inelastic are decreasing. Price actually produces tr and in spite of the increased unit sales, does a modest negative and a form will never produce where a modest negative. So when demand curve with an elastic a modest negative Pr is decreasing. So let's move to the second point. So the graph of monopoly swing, elastic and inelastic portion of demand curve. So here is the graph on the fourth graf, it is y axis and X axis Here is zero and on the x axis quantity. And on the fourth round we are going we are drawn tr girl. And on the second graph here is Y axis and X axis, and on the X axis is quantity. And here is cost and revenue on the Y axis. So first we draw the point T. Which is which is derived price and here is point Q. Which derives the quantity. We draw the line from P to Q. And here on beeline we draw the airline and on the cue point we draw the M. R. Line. So so here we draw the unit elastic line which is POINT A. Which connects Tr to a R N M. R. So on. So on. This point here is relatively elastic and here is relatively inelastic. So here is the full point full graph. So let's move to the third point, which is the point where M. R equals video is the point of maximize tia. In other words we're price elasticity of demand is unit elastic. The M. R. Zero and tr is at its maximum on the graph point represents the maximum tr the prices P and the quantities cube. So I hope you better understand all the three points. So for any further curious and doubt I am there for help. So thank you.

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