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13 February, 17:25

Which statement is true?

A. Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible.

B. If demand is downward sloping, P = MR.

C. If demand is downward sloping, P = ATC.

D. If demand is downward sloping, P > MR.

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Answers (1)
  1. 13 February, 18:11
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    D. If demand is downward sloping, P > MR.

    Explanation:

    Demand curve is plotted on graph on axis of price and quantity. Downward sloping demand curve means to increase quantity demanded (to sell more) it is necessary to sell at lower price.

    Marginal revenue is the additional revenue from selling one more unit. As price has to go down to sell more, additional revenue will be less than current price.
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Home » Business » Which statement is true? A. Instead of applying the marginal decision rule, monopoly firms just set the price as high as possible. B. If demand is downward sloping, P = MR. C. If demand is downward sloping, P = ATC. D.
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