For a monopolist, marginal revenue is
A)equal to price, as it is for a perfectly competitive firm.
B)less than price, as it is for a perfectly competitive firm.
C)equal to price, whereas marginal revenue is less than price for a perfectly competitive firm.
D)less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.

Question

Quizplus · Accepted Answer

For a monopolist, to sell more units of output, it needs to lower the price of output, which means that each additional unit sold will bring in less revenue. Therefore, marginal revenue for a monopolist is less than price. In contrast, for a perfectly competitive firm, it can sell as many units as it wants at the same price, so marginal revenue is equal to price.

For a Monopolist, Marginal Revenue Is