If the monopolist charges the same price to each customer, to sell an additional unit of output requires that the price be lowered on each unit sold. For the monopolist, this leads to A) MR = P. B) MR P. C) MC = P. D) MR

Question

If the monopolist charges the same price to each customer, to sell an additional unit of output requires that the price be lowered on each unit sold. For the monopolist, this leads to
A) MR = P.
B) MR > P.
C) MC = P.
D) MR < P.

Quizplus · Accepted Answer

For a monopolist to sell an additional unit, they must lower the price not just on the marginal unit but on all units sold, which means the marginal revenue (MR) from selling an additional unit is less than the price (P) at which the unit is sold.

If the Monopolist Charges the Same Price to Each Customer