For a monopolist, MR is always less than P because:
A) when a monopolist lowers the price to sell more units, it must lower the prices of all units sold.
B) MR is always less than P regardless of what type of firm we are discussing.
C) marginal revenue is always lower for the next unit sold.
D) when a monopolist needs to sell more units, it must lower marginal revenue in order to do so.

Question

Quizplus · Accepted Answer

A monopolist has market power and can set its price above marginal cost. When the monopolist lowers the price to sell more units, it must lower the prices of all units sold, leading to a decrease in revenue for the monopolist. This means that marginal revenue (MR), which is the additional revenue earned from each additional unit sold, will always be lower than the price (P) set by the monopolist.

For a Monopolist, MR Is Always Less Than P Because