Understanding Monopoly and Marginal Revenue

In a perfectly competitive market, how is the price related to marginal revenue?

• Price is greater than marginal revenue

• Price is less than marginal revenue

• Price is unrelated to marginal revenue

• Price equals marginal revenue

What is a key characteristic of a monopoly in terms of pricing?

• They are price takers

• They cannot change prices

• They can set any price they want

• They must follow market prices

Why can't a non-price discriminating monopoly charge different prices to different customers?

• It is illegal

• It is not profitable

• It is too complex

• It is called price discrimination

What happens to marginal revenue when a monopoly lowers its price to sell more units?

• Marginal revenue increases

• Marginal revenue remains the same

• Marginal revenue becomes zero

• Marginal revenue decreases

Why is understanding the relationship between price and marginal revenue important for monopolies?

• It helps in setting competitive prices

• It is crucial for maximizing profits

• It ensures compliance with regulations

• It simplifies accounting processes