Micro Unit 4, Question 3- Monopoly, Elastic Range

The video tutorial explains the concepts of elastic and inelastic ranges in a monopoly's demand curve, using the total revenue test. It discusses how a monopoly, as a price maker, adjusts prices to sell additional units and how this affects total and marginal revenue. The tutorial further analyzes the elastic and inelastic ranges, emphasizing that monopolies produce in the elastic range where marginal revenue is positive. It concludes with an explanation of profit maximization, where marginal revenue equals marginal cost.

Describe the conditions under which a monopoly will produce in the elastic range.

How does a monopoly maximize profits in relation to marginal cost and marginal revenue?