Elasticity and monopoly?
A monopolist will offer the product if the price is high and quantity low, hence where the elasticity of demand is high. Now where elasticity is high the marginal revenue is negative. How does that go together?
Answer:
you have got it to confused, the marginal revenue is negative where product is inelastic (<1) this happens just after the midpoint of the demand/average revenue curve. neagtive marginal revenue occurs because due to the downaward sloping demand curve, the monopolist must decrease price to sell a marginal good, but a lower price for the last good sold also means a lower price for all goods sold, so by selling one extra, he is losing revenue for every sale, hence negative marginal revenue.
so to answer your question, marginal revenue is negative when elasticity is low, not high.
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Answer:
you have got it to confused, the marginal revenue is negative where product is inelastic (<1) this happens just after the midpoint of the demand/average revenue curve. neagtive marginal revenue occurs because due to the downaward sloping demand curve, the monopolist must decrease price to sell a marginal good, but a lower price for the last good sold also means a lower price for all goods sold, so by selling one extra, he is losing revenue for every sale, hence negative marginal revenue.
so to answer your question, marginal revenue is negative when elasticity is low, not high.
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