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Indicate whether the following statement is true or false and then EXPLAIN why. Under monopoly price...

Indicate whether the following statement is true or false and then EXPLAIN why.

Under monopoly price is greater than average revenue but lower than marginal revenue.

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Answer #1

The statement is false.

In monopoly the price is set above marginal revenue

And the marginal revenue is always less than price

Because the demand curve is downward sloping.

As the firm earns extra revenue by selling one more unit of output.

And the Average revenue is also greater than price and marginal revenue

Because Average revenue is the revenue generated per unit of out put sold and a monopoly generally seeks to produce the quantity of out put that maximizes profit.

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