Table 15-18
A monopolist faces the following demand curve: Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's marginal revenue is
A)always more than the price of its good, beyond the first unit.
B)always equal to the price of its good.
C)always less than the price of its good, beyond the first unit.
D)sometimes more and sometimes less than the price of its good.

Question

Table 15-18
A monopolist faces the following demand curve:  Suppose marginal cost is constant at $8 per unit.
-Refer to Table 15-18. The monopolist's marginal revenue is
A)always more than the price of its good, beyond the first unit. 
B)always equal to the price of its good. 
C)always less than the price of its good, beyond the first unit. 
D)sometimes more and sometimes less than the price of its good.

Quizplus · Accepted Answer

A monopolist's marginal revenue is the change in revenue resulting from producing one more unit of output. In this case, the monopolist's demand curve is downward sloping, so in order to sell an additional unit, the monopolist must lower the price on all units it sells. This means that the marginal revenue is less than the price of the good beyond the first unit. Therefore, the correct choice is (C).

Table 15-18 A Monopolist Faces the Following Demand Curve: Suppose Marginal