For a single-price monopoly,marginal revenue is less than price because
A)the revenue gained from the last unit sold is offset by further gains in price on units not sold at all.
B)total revenue always decreases as output increases.
C)the revenue gained from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price.
D)the price does not need to be lowered on all previous units sold.
E)demand is perfectly elastic.

Question

Quizplus · Accepted Answer

In a single-price monopoly, the company has the power to set the price for their product. However, in order to sell more units, the company must lower the price. When the company lowers the price, it causes a revenue loss on the units that were previously sold at a higher price. As a result, the revenue gained from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price. This leads to marginal revenue being less than price in a single-price monopoly.

For a Single-Price Monopoly,marginal Revenue Is Less Than Price Because