If a non-discriminating monopolist decides to lower its price to sell one more unit of its product,then
A)total revenue rises by an amount equal to the price
B)some revenue is lost to the extent that units previously sold at a higher price now sell for a lower price;however,the additional unit sold brings in new revenue
C)marginal revenue increases when total revenue increases
D)the net effect on total revenue is typically zero since the price must fall
E)the net effect on total revenue is typically negative since the price must fall

Question

Quizplus · Accepted Answer

When a non-discriminating monopolist lowers the price to sell an additional unit, it will lose some revenue because previously sold units will now sell at a lower price. However, the additional unit sold will bring in new revenue. Therefore, the net effect on total revenue will depend on the extent of the revenue loss from previously sold units and the additional revenue from the new unit sold. The other options (A, C, D, and E) are not correct because they do not capture the full effect of lowering the price to sell one more unit.

If a Non-Discriminating Monopolist Decides to Lower Its Price to Sell