For a monopoly,marginal revenue is less than price because
A) the demand for the firm's output is downward sloping.
B) the firm has no supply curve.
C) the firm can sell all of its output at any price.
D) the demand for the firm's output is perfectly elastic.

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue earned from selling one more unit of output. In a monopoly, the demand for the firm's output is downward sloping, meaning that in order to sell more units, the firm must lower the price of all units sold. As a result, the marginal revenue earned from selling an additional unit is less than the price of that unit because the price had to be lowered for all units.

For a Monopoly,marginal Revenue Is Less Than Price Because