Which statement is TRUE?
A)Instead of applying the marginal decision rule,monopoly firms just set the price as high as possible.
B)If demand is downward sloping,P = MR.
C)If demand is downward sloping,P = ATC.
D)If demand is downward sloping,P MR.

Question

Which statement is TRUE?
A)Instead of applying the marginal decision rule,monopoly firms just set the price as high as possible.
B)If demand is downward sloping,P = MR.
C)If demand is downward sloping,P = ATC.
D)If demand is downward sloping,P > MR.

Quizplus · Accepted Answer

In a market with downward-sloping demand, the price (P) a consumer is willing to pay for the last unit is higher than the additional revenue (MR) the firm gets from selling that unit. This is because, in such markets, to sell more units, the firm must lower the price on all units sold, which makes MR less than P.

Which Statement Is TRUE