For a Monopolist, MR Is Always Less Than P Because

question 134

Multiple Choice

For a monopolist, MR is always less than P because:

• A) when a monopolist lowers the price to sell more units, it must lower the prices of all units sold.
• B) MR is always less than P regardless of what type of firm we are discussing.
• C) marginal revenue is always lower for the next unit sold.
• D) when a monopolist needs to sell more units, it must lower marginal revenue in order to do so.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

Within discounted cash flow analysis, it's the interest rate applied to derive the present value of cash flows expected in the future.

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Cash Inflows

Cash inflows are the money received by a business from its various activities, such as sales revenues, financing, and investments.