If a single-price monopolist has to lower price to sell an additional unit of its good, and it charges the same price for all units of its good, it follows that
A)its demand curve will be its marginal revenue curve.
B)it will maximize profits by maximizing revenue.
C)it will sell its good for a price above average total cost.
D)b and c
E)none of the above

Question

Quizplus · Accepted Answer

A single-price monopolist faces a downward-sloping demand curve, meaning that to sell an additional unit, the price must be lowered for all units sold, not just the additional unit. This causes the marginal revenue to be less than the price, so A is incorrect. Maximizing revenue does not necessarily lead to profit maximization for a monopolist, making B incorrect. While a monopolist may sell its good for a price above average total cost, this is not a direct consequence of the need to lower price to sell additional units, so C is not necessarily true in this context.

If a Single-Price Monopolist Has to Lower Price to Sell