If a profit-maximizing monopolist faces a downward-sloping market demand curve, its
A)average revenue is less than the price of the product.
B)average revenue is less than marginal revenue.
C)marginal revenue is less than the price of the product.
D)marginal revenue is greater than the price of the product.

Question

Quizplus · Accepted Answer

For a monopolist facing a downward-sloping demand curve, the price of the product (which is the same as average revenue) is always greater than marginal revenue because to sell an additional unit, the monopolist must lower the price on all units sold.

If a Profit-Maximizing Monopolist Faces a Downward-Sloping Market Demand Curve