A single-price monopoly faces a linear demand curve. If the marginal revenue for the second unit is $20, then the marginal revenue for the
A) third unit is also $20.
B) first unit is less than $20.
C) third unit is less than $20.
D) third unit is more than $20.
E) more information is needed to determine if the marginal revenue for the third unit is more than, less than or equal to $20.

Question

Quizplus · Accepted Answer

In a linear demand curve, the marginal revenue decreases as the quantity sold increases. Therefore, the marginal revenue for the third unit is less than $20.

A Single-Price Monopoly Faces a Linear Demand Curve