If a monopolist charges the same price for all of the units of the good that it sells, then beyond the first unit sold A) P = MR because the firm maximizes profit. B) P = MR because the monopolist holds price constant. C) P MR because the monopolist must decrease price on all units in order to sell another unit.

Question

If a monopolist charges the same price for all of the units of the good that it sells, then beyond the first unit sold
A) P = MR because the firm maximizes profit.
B) P = MR because the monopolist holds price constant.
C) P < MR because the monopolist must decrease price on all units in order to sell another unit.
D) P > MR because the monopolist must decrease price on all units in order to sell another unit.

Quizplus · Accepted Answer

In a monopoly, to sell an additional unit, the monopolist must lower the price not just for that unit but for all units sold, which means the additional revenue (MR) from selling one more unit is less than the price (P) at which the units are sold.

If a Monopolist Charges the Same Price for All of the Units