For the single-price monopoly,marginal revenue is
A)more important than marginal cost
B)always more than marginal cost
C)always less than average cost
D)always less than the price of output
E)more significant than total revenue

Question

Quizplus · Accepted Answer

For a single-price monopoly, the marginal revenue is always less than the price of the output. This is because the monopolist has to lower the price of all units in order to sell an additional unit, resulting in a decrease in revenue for all units sold. The monopolist will continue to produce until marginal revenue equals marginal cost, which is at a lower level of output than a perfectly competitive market. Therefore, the monopolist has to charge a higher price to cover the higher average cost of production.

For the Single-Price Monopoly,marginal Revenue Is