This is my last post on this question ( I am headed out of town for 3 weeks).

WHY ARE PRICES SO HIGH IF IRI AND RATCLIFF HAVE “CORNERED THE MARKET”?

This would be the answer that gets you an “A” in business school…..

Price elasticity plays a role in monopoly and near monopoly price setting. The total revenue test shows that the monopolist will avoid the inelastic segment of its demand schedule. As long as demand is elastic, total revenue will rise when the monopoly lowers its price, but this will not be true when demand becomes inelastic. At this point, total revenue falls as output expands, and since total costs rise with output, profits will decline as demand becomes inelastic. Therefore, the monopolist will expand output only in the elastic portion of its demand curve.

I’m just say’in…….