For a competitive firm,marginal revenue is ________ price,whereas for a monopolist marginal revenue is ________ price.
A) equal to; greater than
B) equal to; less than
C) less than; equal to
D) greater than; equal to

Question

Quizplus · Accepted Answer

For a competitive firm, marginal revenue equals price because the firm is a price taker and cannot influence the price. Therefore, any additional unit sold will generate revenue equal to the market price. 
For a monopolist, on the other hand, marginal revenue is less than price because the monopolist must lower the price of all units sold in order to sell one additional unit. This is due to the fact that the monopolist faces the entire market demand curve and must lower the price to sell more units.

For a Competitive Firm,marginal Revenue Is ________ Price,whereas for a Monopolist