A single-price monopoly faces a linear demand curve. If the marginal revenue for the second unit is $20, then the marginal revenue for the
A)first unit is less than $20.
B)third unit is less than $20.
C)third unit is more than $20.
D)third unit is also $20.
E)More information is needed to determine if the marginal revenue for the third unit is more than, less than, or equal to $20.

Question

Quizplus · Accepted Answer

In a monopoly with a linear demand curve, marginal revenue decreases as quantity increases. Therefore, the marginal revenue for the third unit will be less than $20.

A Single-Price Monopoly Faces a Linear Demand Curve