Suppose that a non-discriminating monopolist lowers its price from $75 to $70 in order to sell more output.Marginal revenue will
A)equal $75
B)equal $70
C)be between $75 and $70
D)be less than $70
E)be greater than $75

Question

Quizplus · Accepted Answer

For a non-discriminating monopolist, marginal revenue is less than the price because to sell additional units, the monopolist must lower the price on all units sold, not just the additional ones. Thus, when the price is lowered from $75 to $70, the marginal revenue will be less than $70.

Suppose That a Non-Discriminating Monopolist Lowers Its Price from $75