A monopoly's marginal revenue is less than its price because
A)its demand curve slopes upward
B)its demand curve is horizontal.
C)each additional unit can be sold for a different price.
D)each additional unit can be sold only if the price is increased for all other units sold.
E)each additional unit can be sold only if the price is reduced for all units sold.

Question

Quizplus · Accepted Answer

In a monopoly, the demand curve is downward sloping, meaning that to sell more units, the monopolist must lower the price. This price reduction applies not just to the additional unit sold but to all units sold, making the marginal revenue (the revenue from selling one more unit) less than the price of that unit.

A Monopoly's Marginal Revenue Is Less Than Its Price Because