In a monopoly, the price of a good or service is always
A) less than the average total cost.
B) equal to marginal revenue.
C) greater than marginal revenue.
D) less than marginal revenue.

Question

Quizplus · Accepted Answer

In a monopoly, the price set for a good or service is always greater than the marginal revenue. This is because a monopolist faces a downward-sloping demand curve, and to sell additional units, the price must be lowered on all units sold, which makes the additional revenue (marginal revenue) from selling one more unit less than the price at which that unit is sold.

In a Monopoly, the Price of a Good or Service