In a monopoly, marginal revenue is ?
Correct answer: A. lower than price for all units other than the first
- A. lower than price for all units other than the first
- B. less than price at low levels of output and greater than price at high levels of output
- C. always greater than price
- D. always equal to price
Explanation
A monopolist faces a downward-sloping demand curve, so reducing price to sell an additional unit also lowers the price received on earlier units. Therefore marginal revenue is below price for every unit after the first.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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