Final answer:
For a monopoly, it is false that price is less than marginal revenue. Marginal revenue is less than the price for a monopolist because to sell more units, the price must be lowered, which reduces the marginal revenue for all units sold. option b is answer
Step-by-step explanation:
The statement that for a monopoly producing a certain amount of output, price is less than marginal revenue is false. In a monopoly, the marginal revenue (MR) is always less than the price at which the product is sold. This occurs because a monopolist faces a downward sloping demand curve, meaning that to sell additional units, the firm must lower its price, which in turn lowers the marginal revenue.
Thus, when considering how a profit-maximizing monopoly chooses output and price, it must be understood that the price will be higher than the marginal revenue. The disparity arises because lowering the price to sell one more unit will apply to all units sold, not just the additional unit.
Consequently, the additional revenue gained from selling one more unit (marginal revenue) will be less than the price at which the unit is sold due to the price reduction applied to all units. Therefore, by the rule wherein a monopoly maximizes profit by producing up to the quantity where marginal revenue equals marginal cost (MR=MC), it is emphasized that marginal revenue is distinct from, and less than, the selling price. option b is answer