Which of the following best explains why a monopolist's marginal revenue is less than the sale price?
A) To sell more units, a monopolist must increase the price on all units sold.
B) As a monopolist expands output, its average total cost declines.
C) When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.
D) When a monopolist reduces price in order to sell more units, it must lower the price of some units that could otherwise have been sold at a higher price.

Question

Quizplus · Accepted Answer

A monopolist can only increase sales by lowering the price, but this applies to all units sold. As a result, the monopolist must lower the price on some units that could have been sold at a higher price, leading to a decrease in marginal revenue.

Which of the Following Best Explains Why a Monopolist's Marginal