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24 May, 14:02

For a profit-maximizing monopoly that charges the same price to all consumers, what is the relationship between price P, marginal revenue MR and marginal cost MC?

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  1. 24 May, 14:15
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    The relationship between price, marginal revenue, and marginal cost for the scenario in the question = P > MR and MR = MC

    This is because the marginal revenue of Monopoly firms is lesser than the price at all times.

    Thus, a fall in price would mean that some revenue is forgone

    For profit maximization, the marginal revenue is always equal to the marginal cost. Hence the reason for the expression above.
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