Which of the following is TRUE?
A) Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible.
B) If demand is downward-sloping, P = MR.
C) If demand is downward-sloping, P = ATC.
D) If demand is downward-sloping, P MR.

Question

Which of the following is TRUE?
A) Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible.
B) If demand is downward-sloping, P = MR.
C) If demand is downward-sloping, P = ATC.
D) If demand is downward-sloping, P > MR.

Quizplus · Accepted Answer

In a monopoly, the demand curve is downward-sloping, meaning the price (P) is greater than marginal revenue (MR) because the firm must lower the price to sell additional units, thus reducing MR.

Which of the Following Is TRUE