Intro to Imperfect Competition- Micro Topic 4.1 (Part 1 of 2)

The video tutorial explains why marginal revenue is less than the demand curve for monopolies. It begins with an introduction to the concept and then delves into the pricing strategies of monopolies. The tutorial uses examples to illustrate how monopolies must lower prices to sell additional units, affecting total and marginal revenue. The key takeaway is understanding the relationship between price, demand, and revenue in a monopoly setting.

Why is marginal revenue less than the demand curve in monopolies?

• Because monopolies can set any price they want.

• Because monopolies must lower prices to sell additional units.

• Because monopolies have no competition.

• Because monopolies can price discriminate.

What happens to total revenue when a monopoly lowers its price to sell one more unit?

• Total revenue decreases.

• Total revenue increases.

• Total revenue remains the same.

• Total revenue becomes zero.

In a monopoly, why can't the firm charge different prices to different customers?

• Because it would decrease total revenue.

• Because it would increase marginal revenue.

• Because it is illegal.

• Because it would lead to customer dissatisfaction.

How does lowering the price to sell more units affect the marginal revenue?

• Marginal revenue becomes equal to the price.

• Marginal revenue remains constant.

• Marginal revenue decreases because of the loss on previous units.

• Marginal revenue increases by the same amount as the price.

What is the marginal revenue when the price is lowered to $8 for three units?

• $18

• $24

• $6

• $8