Multiple Choice QuestionMarginal revenue is less than price at every unit of output because the monopolistMultiple choice question.could have sold these prior units at a higher price if it had not produced and sold the extra output.could have sold these prior units at a price equal to marginal costcould have sold these prior units at a price higher than demandcould have sold these prior units at a lower price if it had not produced and sold the extra output.
Question
Multiple Choice QuestionMarginal revenue is less than price at every unit of output because the monopolistMultiple choice question.could have sold these prior units at a higher price if it had not produced and sold the extra output.could have sold these prior units at a price equal to marginal costcould have sold these prior units at a price higher than demandcould have sold these prior units at a lower price if it had not produced and sold the extra output.
Solution
The correct answer is "could have sold these prior units at a higher price if it had not produced and sold the extra output."
Here's why:
Marginal revenue is the additional revenue that a firm receives from selling one more unit of a good or service. It is calculated by taking the change in total revenue and dividing it by the change in quantity.
In a monopoly, the firm is the only seller in the market, and therefore, it has the power to control the price of its product. When a monopolist sells an additional unit of output, it has to lower the price of all units sold to sell this extra unit. This is because, in a monopoly, the demand curve is downward sloping, meaning that the firm can sell more only by lowering the price.
So, when a monopolist sells an extra unit of output, it brings in revenue from the sale of that unit, but it also loses some revenue because it has to lower the price on all the units it could have sold at a higher price. This is why the marginal revenue of a monopolist is less than the price at every unit of output.
Similar Questions
Multiple Choice QuestionWhich of the following describes why marginal revenue is less than price for monopolists?Multiple choice question.Because marginal revenue is greater than marginal cost which is less than priceBecause total revenue is greater than priceBecause the lower price of the extra unit of output also applies to all prior units of outputBecause the lower price of the extra unit of output only applies to subsequent units of output
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Firm's price multiplied by Quantity of output produced gives __.Multiple choice question.marginal revenuetotal revenueaverage revenuetotal profits
Multiple Choice QuestionWhich of the following does the monopolist not have?Multiple choice question.A marginal revenue curveA marginal cost curveA supply curveA demand curve
Multiple Choice QuestionMonopolistically competitive firms are not productively efficient because output is less than society's optimal level because a producer's Blank______.Multiple choice question.average variable cost per unit is not at its optimal possible costaverage fixed cost per unit is not at its lowest possible costmarginal revenue per unit is not at its optimal possible priceaverage total cost per unit is not at its lowest possible cost
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