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JAMB UTME - Economics - 2005

Question 1 Report

A profit maximizing monopolist should produce within the range where his demand is

Answer Details
When a monopolist produces goods, the price of the goods usually increases, which leads to a decrease in the quantity demanded. The demand for a monopolist's goods can be categorized as elastic, inelastic, or unitary elastic. If the demand for a good is inelastic, then the quantity demanded changes less than the price. Therefore, a monopolist should produce within the range where his demand is inelastic to maximize his profits. If the demand is elastic, the monopolist may need to lower the price to increase sales, which will lead to a reduction in profit. If the demand is unitary elastic or infinitely elastic, the monopolist's profits will also be affected.
Read lesson note on The Theory Of Demand (JAMB)
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