Which of the following best explains why a monopolist's marginal revenue is less than the sale price?
A) To sell more units, a monopolist must increase the price on all units sold.
B) To sell more units, a monopolist must lower the price of some units that could otherwise have been sold at a higher price.
C) When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.
D) As a monopolist expands output, its average total cost declines.

Question

Quizplus · Accepted Answer

A monopolist's marginal revenue is less than the sale price because to sell more units, the monopolist must lower the price of some units, which could otherwise have been sold at a higher price. This is because the monopolist faces a downward sloping demand curve, which means that it has to lower the price of additional units sold in order to generate more sales.

Which of the Following Best Explains Why a Monopolist's Marginal