The monopolist's marginal revenue is less than price since
A) additional units can only be sold if the price is lowered on all units sold.
B) the demand function is horizontal.
C) average revenue is also less than price.
D) average total cost is declining.

Question

Quizplus · Accepted Answer

The monopolist's marginal revenue is less than price because in order to sell additional units, the monopolist must lower the price on all units sold, resulting in a lower marginal revenue. This is because the monopolist has market power and can set the price for their product.

The Monopolist's Marginal Revenue Is Less Than Price Since