The trade-offs faced by a monopolist in cutting price to sell a larger quantity leads to marginal revenue being

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When a monopolist cuts the price to sell a larger quantity, it faces a trade-off between the gain from selling more units and the loss from reducing the price. As a result, the marginal revenue (the extra revenue gained from selling one additional unit) will be less than the price. This is because the monopolist has to lower the price for all units sold, not just the additional one. Therefore, to maximize profit, the monopolist should set the price where marginal cost equals marginal revenue, which will be below the original price.

The Trade-Offs Faced by a Monopolist in Cutting Price to Sell