Final answer:
Marginal revenue for a monopolist is less than price because a monopolist faces a downward-sloping demand curve that necessitates a price drop for each additional unit sold, reducing marginal revenue. Monopolists aim to maximize profits by equating marginal cost with marginal revenue, not by equating price with revenue.
Step-by-step explanation:
For a monopolist, marginal revenue is always less than price under uniform pricing primarily because the monopolist faces a downward-sloping demand curve. When a monopolist sells an additional unit, the price of all units sold must decrease to accommodate the higher quantity demanded at that lower price point. This interplay between price and quantity means that the marginal revenue obtained from selling one extra unit is less than the price at which the previous units were sold. The monopolist is also a price maker, setting both price and quantity to maximize profits, not to maximize revenue. The marginal revenue curve for a monopolist lies beneath the market demand curve, highlighting the decrease in marginal revenue with each additional unit sold at a lower price.
However, a monopolist seeks to maximize profits, not revenue. Therefore, they will produce the quantity where marginal cost equals marginal revenue, but due to the downward-sloping demand curve, the price charged for the product will be higher than the marginal revenue. This results in the characteristic feature of marginal revenue being less than price in a monopolistic market structure.