Ramsay pricing suggests that a multi-product regulated monopolist should set a higher price for a product with a relatively more elastic demand. True False

The statement is False.

Explanation

Ramsay pricing is a method used to determine optimal pricing for services or products provided by a monopolist, especially in the context of multi-product firms. It suggests that a monopolist should set higher prices for goods that have relatively less elastic demand and lower prices for goods that have more elastic demand. This is because consumers are more sensitive to price changes for products with elastic demand, so lowering the price can lead to significantly higher sales volumes, while products with inelastic demand can bear higher prices without a substantial decrease in quantity demanded.

Summary

Thus, according to Ramsay pricing theory, a multi-product regulated monopolist should set a higher price for a product with relatively less elastic demand, not more elastic demand.