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Determinants of Elasticity of Supply

A monopolist ...

Question

A monopolist fixes price of his product on the basis of elasticity of demand for his product.

A

True

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B

False

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Solution

The correct option is A True
True.
The demand curve for a monopoly is elastic in nature, implying that more can be sold at a lower price. Hence, a higher price is fixed when elasticity of demand is low and low price is fixed when elasticity of demand is high.

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