In pure monopoly, what is the relation between the price and the marginal revenue ?
Correct answer: A. the price is greater than the marginal revenue
- A. the price is greater than the marginal revenue
- B. the price is less than the marginal revenue
- C. there is no relation
- D. they are equal
Explanation
A monopolist faces a downward-sloping demand curve, so selling an additional unit requires lowering the price and reduces revenue on earlier units. Therefore marginal revenue is less than price.
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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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