For a monopolist,the price effect:
A) is the increase in revenues from selling a greater quantity at a lower price.
B) is always outweighed by the quantity effect.
C) is the decrease in revenues from selling a greater quantity at a lower price.
D) always outweighs the quantity effect.

Question

Quizplus · Accepted Answer

The price effect is the decrease in revenues that a monopolist experiences when it lowers the price of its product to sell a greater quantity. This is because, as the price is lowered, the revenue per unit also decreases, which outweighs the increase in revenue gained by selling more units. Therefore, choice C is the correct answer. Choices A, B, and D are incorrect.

For a Monopolist,the Price Effect