Economics question help?

Question

A monopolist has determined that at the current level of output the price elasticity of demand is -0.15. Which of the following statements is true?

A: The firm should reduce output

B: This is typical for a monopolist; output should be left unchanged.

C: The firm should increase output

D: It is impossible to say what the firm should do unless we have more information.

Answer 1

A should be the right answer. A reduction in output will jack up price and income even more if the demand is inelastic.