For a seller with market power, as the number of units sold increases, marginal revenue
A)falls further and further below the price.
B)rises further and further above the price.
C)remains constant and unchanging.
D)remains equal to the price needed to sell the output.

Question

Quizplus · Accepted Answer

For a seller with market power, as they increase the number of units sold, the marginal revenue will fall below the price. This is because in order to sell additional units, the seller must lower the price for all units sold, as opposed to a perfectly competitive market where the price is fixed and the seller earns the same revenue per unit sold. Therefore, the additional revenue earned from each additional unit sold is less than the revenue earned from the previous unit sold, causing marginal revenue to decline below the price.

For a Seller with Market Power, as the Number of Units