For a monopolist, the price effect:
A)is the increase in revenue from selling a greater quantity at a lower price.
B)is always outweighed by the quantity effect.
C)is the decrease in revenue from selling a greater quantity at a lower price.
D)always outweighs the quantity effect.

Question

Quizplus · Accepted Answer

The price effect for a monopolist refers to the decrease in revenue from having to lower the price on all units sold to sell an additional unit, which is a consequence of the downward-sloping demand curve they face. This contrasts with the quantity effect, which is the increase in total revenue from selling more units, even at a lower price.

For a Monopolist, the Price Effect