Marginal revenue steadily declines as a monopolist tries to increase the number of units sold because
A) total revenue declines as additional units are sold.
B) the demand curve shifts to the left.
C) production costs fall as output rises.
D) the greater the sales, the smaller the profit.
E) to sell additional units, the firm must reduce the price of all the units it sells.

Question

Quizplus · Accepted Answer

As a monopolist tries to increase the number of units sold, it must reduce the price of all units sold in order to sell additional units. This means that the marginal revenue earned from each additional unit sold will decrease, causing the overall marginal revenue to steadily decline.

Marginal Revenue Steadily Declines as a Monopolist Tries to Increase