Question

Because a​ monopoly's demand curve is the same as the market demand curve for its​ product, A. the​ monopoly's marginal revenue equals its price. B. the​ monopoly's average total cost always falls as it increases its output. C. the monopoly must lower its price to sell more of its product. D. the monopoly is a price taker.

Answer 1

Answer: C. the monopoly must lower its price to sell more of its product

Step-by-step explanation:

Even though a Monopoly can charge whatever price it wants because there is little competition for it, it must do so at a price that maximises it's profit.

Look at the attached graph. Do you notice how the demand curve for a Monopoly is downward sloping because as a Monopoly, their Demand is the market demand as they are the main / only Suppliers.

Because the demand curve is downward sloping, if they set the price at Ph they will only be able to sell QI Quantity but if they set the price at Pi they can sell more Quantity at Qh.

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