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13 May, 09:41

If a monopoly lowers its price, its: a) total revenue must increase. b) total revenue must decrease. c) marginal revenue must increase. d) marginal revenue must decrease.

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  1. 13 May, 09:43
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    The correct answer is d) marginal revenue must decrease.

    Explanation:

    The marginal income of the monopolist is always less than the price of the good.

    - The demand curve is of negative slope.

    - When a monopoly lowers the price to sell a unit plus the income previously received by the units sold also decreases.

    Because the price falls as production increases, the marginal revenue is less than the price. The marginal revenue curve has twice the slope of the demand curve and the same intersection with the vertical axis.
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