A monopolist's average revenue is always
A)equal to marginal revenue.
B)greater than the price of its product.
C)equal to the price of its product.
D)less than the price of its product.

Question

Quizplus · Accepted Answer

In a monopolist market, the firm is the only supplier of the product, so the demand curve is the market demand curve. Therefore, to sell more units of the product, the monopolist must lower the price of the product. The price is determined by the point on the demand curve where the quantity demanded equals the quantity supplied by the firm. The average revenue is the total revenue divided by the quantity sold. Since the price remains constant for each unit sold, the average revenue is equal to the price of the product.

A Monopolist's Average Revenue Is Always