When a monopolist increases the amount of output that it produces and sells, average revenue
A)increases, and marginal revenue increases.
B)increases, and marginal revenue decreases.
C)decreases, and marginal revenue increases.
D)decreases, and marginal revenue decreases.

Question

Quizplus · Accepted Answer

In a monopolistic market, when a monopolist increases output, the average revenue (price) decreases due to the downward-sloping demand curve. Additionally, marginal revenue decreases at a faster rate than the average revenue because to sell more units, the monopolist must lower the price not just for the additional units but for all units sold, which impacts the marginal revenue more significantly.

When a Monopolist Increases the Amount of Output That It