If a monopolist wishes to increase its output and quantity sold
A) it must reduce its price, so its marginal revenue is greater than its price.
B) it must reduce its price, so its marginal revenue is less than its price.
C) it must raise its price, so its marginal revenue is greater than its price.
D) it must raise its price, so its marginal revenue is less than its price.

Question

Quizplus · Accepted Answer

For a monopolist to sell more, it must lower the price due to the downward-sloping demand curve. This results in marginal revenue being less than the price because each additional unit sold lowers the price for all units sold, not just the marginal unit.

If a Monopolist Wishes to Increase Its Output and Quantity