When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect.

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When a monopolist increases the quantity sold, it must lower the price to sell additional units, leading to a decrease in total revenue per unit sold due to the price effect. This effect occurs because, in a monopoly, the firm faces a downward-sloping demand curve, meaning it can only sell more by reducing the price.

When a Monopolist Increases the Quantity That It Sells, Price