For a single-price monopoly,price is
A) greater than marginal revenue.
B) one half of marginal revenue.
C) equal to marginal revenue.
D) unrelated to marginal revenue.
E) always less than average total cost when the firm maximizes its profit.

Question

Quizplus · Accepted Answer

A single-price monopoly faces a downward-sloping demand curve, which means that in order to sell more units, the firm must lower its price. This results in a lower marginal revenue for each additional unit sold. To maximize profits, a monopoly will produce where marginal revenue equals marginal cost, but since the demand curve is downward-sloping, the price charged is greater than marginal revenue.

For a Single-Price Monopoly,price Is