For a monopoly,marginal revenue for all units greater than 1:
A)is always less than the price.
B)can be negative.
C)is zero when total revenues are maximized.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

A) is true because in a monopoly, to sell more units, the monopolist needs to lower the price. This means the marginal revenue from each additional unit sold will be less than the price.
B) is also true because if the monopolist raises the price too high, there will be a decrease in demand which will result in negative marginal revenue.
C) is also true because at the profit-maximizing output level, where marginal revenue equals marginal cost, the total revenue is maximized, and therefore, marginal revenue is equal to zero.

For a Monopoly,marginal Revenue for All Units Greater Than 1