As a monopolist increases the quantity of output produced,_____
A)both price and marginal revenue remain constant.
B)price remains constant, but marginal revenue decreases.
C)price decreases, but marginal revenue remains constant.
D)both price and marginal revenue decrease, but price falls faster than marginal revenue.
E)both price and marginal revenue decrease, but marginal revenue falls faster than price.

Question

Quizplus · Accepted Answer

In a monopoly, as output increases, the price must decrease to sell additional units, and marginal revenue falls faster than price because the monopolist must lower the price on all units sold, not just the additional ones.

As a Monopolist Increases the Quantity of Output Produced,_____