A researcher wants to test whether a monopoly baseball team

A researcher wants to test whether a monopoly baseball team is a profit maximizer. Describe one way to test this hypothesis using the elasticity of demand for tickets. Why might such a test be inadequate?

Solution

the researcher must check whether the demand is inelastic or not i.e. the whether the demand falls by less amount when the price rises.

The test is inadequate because the monopolist can still maximize profit by practising price discrimination i.e. charging different price to different customers.