For a monopolist who faces a downward-sloping demand curve, marginal revenue is less than price whenever quantity sold is positive.

Question

Quizplus · Accepted Answer

This is true for a monopolist because they have market power and can raise prices without losing all their customers. As they increase the quantity sold, the price they can charge for each unit decreases due to the downward-sloping demand curve. This means that the marginal revenue they earn from selling an additional unit of the product will be less than the price they charge for that unit.

For a Monopolist Who Faces a Downward-Sloping Demand Curve, Marginal