Concept:A monopolist’s ability to gain revenue by reducing output depends on how buyers respond to a higher price, which is determined by the demand curve.
Explanation:A monopolist can choose either the price or the output level, but not both at the same time.
When he restricts output, the price rises along the existing demand curve.
Whether total revenue increases depends on price elasticity of demand.
If demand is inelastic, the percentage fall in quantity demanded is smaller than the percentage rise in price, so total revenue increases.
If demand is elastic, the quantity falls by a larger percentage than the price rise, so total revenue decreases.
Therefore, the shape of the demand curve determines whether restricting output raises revenue.
Answer:C. demand curve