A. Explain how the price effect contributes to the fact that, for a monopoly, marginal revenue is always less than the price. B. Explain how the quantity effect contributes to the fact that, for a monopoly, marginal revenue is always less than...
A. the revenue gain from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price. B. the revenue gain from the last unit sold is offset by further gains in price on units not sold at all. C. total revenue always decreases as out...
A monopolist's marginal revenue is less than the price of its product because: (1) its demand curve is the market demand curve, so (2) to increase the amount sold, the monopolist must lower the price of its good for every unit it sells. (3) This cut in prices reduces revenue on ...
For a monopolist: a. Average revenue is always greater than the price of the good, b. Marginal revenue is always less than the price of the good, c. Marginal cost is always greater than the average total cost, d. All of the above are ...
The marginal revenue curve is more of a downward slope. As the number of units increases, the sale price will need to decrease to meet the needs of supply and demand. Competitive companies vs. monopolies Marginal revenue should stay relatively stable for competitive firms – on the chart ...
however, a business must lower its prices to sell additional units, so marginal and average revenue will not always be equivalent. The price changes as the number of units sold changes, so marginal revenue is lower with each additional unit and will be equal to or less than average revenue....
However, marginal revenue is very different for monopolies. Monopolies have a decreasing marginal revenue curve. The marginal revenue a monopoly gets from selling an additional unit will always be less than the price the unit is sold for. Since a monopoly's output affects the market price (...
For instance, in a truly competitive market place where manufacturers are selling mass-produced, homogenous products at the market price, the marginal revenue is equal to the market price. In other words, manufacturers of commodities with little differentiation will always sell their products at the...
Marginal Revenue The marginal revenue of a company is the revenue of its last unit sold. For a monopolist, this is always decreasing -- producing more units means producing at a lower price, and therefore making more units leads to less marginal revenue due to that reduced price. The margina...
If her marginal cost is higher than this – say, $22 – then she would not make a profit on this single-unit transaction. From here, she must work out how to make her marginal cost equal her marginal revenue. She has a few options: Perhaps she can negotiate a higher unit price ...