Introduction to Economics 1 Deneme Sınavı Sorusu #1132381
"When a monopoly increases production by one unit, it must reduce the price it charges for every unit it sells, and this cut in price reduces the revenue on the units it was already selling."
According to the information above, which of the following results is true?
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A monopoly’s marginal revenue is less than its price. |
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A monopoly’s marginal expense is less than its price. |
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A monopoly’s marginal revenue is more than its price. |
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A monopoly’s marginal expense is more than its price. |
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A monopoly’s marginal revenue is less than its value. |
Since a competitive firm can sell all it wants at the market price, there is no price effect. When a monopoly increases production by one unit, it must reduce the price it charges for every unit it sells, and this cut in price reduces the revenue on the units it was already selling. As a result, a monopoly’s marginal revenue is less than its price.
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