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Part $1$

Are$$ major$-$league baseball clubs$$ profit$-$maximizing monopolies? Some observers of this market have contended that baseball club owners want to maximize attendance or revenue. Alexander$(2001)$ says that one test of whether a firm is a$$ profit$-$maximizing monopoly is to check whether the firm is operating in the elastic portion of its demand curve$($which he finds is$$ true$).$

Part $2$

Why is that a relevant$$ test? What would the elasticity be if a baseball club were maximizing$$ revenue?

A$.$

If a firm were operating in the inelastic portion of the demand$$ curve, it could raise its price and increase profit. Revenue is maximized when elasticity equals $0.$

B$.$

If a firm were operating in the elastic portion of the demand$$ curve, it could raise its price and increase profit. Revenue is maximized when elasticity equals $0.$

C$.$

If a firm were operating in the inelastic portion of the demand$$ curve, it could raise its price and increase profit. Revenue is maximized when elasticity equals

minus$1.$

D$.$

If a firm were operating in the elastic portion of the demand$$ curve, it could raise its price and increase profit. Revenue is maximized when elasticity equals

minus$1.$