Which of the following conditions is true for a monopolist?
A) MR

Question

Which of the following conditions is true for a monopolist?
A) MR < P
B) MR = P
C) MR = AFC
D) MR < AVC

Quizplus · Accepted Answer

In a monopolistic market structure, the firm has the power to set the price of the product it offers. Therefore, the marginal revenue (MR) of the firm will always be less than the price (P) of the product, as the firm must reduce the price of all units it sells to increase sales. However, the reduction in price for an additional unit sold also reduces the revenue for all other unit sold. Therefore, the monopolist's demand curve is downward sloping, and MR will always be less than P in a monopolistic market structure.

Which of the Following Conditions Is True for a Monopolist