ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If demand is price elastic, a price reduction increases total revenue. To sell an additional unit, a monopoly firm must lower its price. The sale of one more unit will increase revenue because the percentage increase in the quantity demanded exceeds the percentage decrease in the price.

Detailed explanation-2: -1. Because the monopolist is a single seller, it faces the market demand curve for the product produced. a. This demand curve is negatively sloped and shows that the monopolist can sell more output only by lowering the price of the product.

Detailed explanation-3: -Monopoly Pricing: Monopolies create prices that are higher, and output that is lower, than perfectly competitive firms. This causes economic inefficiency.

Detailed explanation-4: -A monopoly price is set by a monopoly. A monopoly occurs when a firm lacks any viable competition and is the sole producer of the industry’s product. Because a monopoly faces no competition, it has absolute market power and can set a price above the firm’s marginal cost.

Detailed explanation-5: -Answer and Explanation: The marginal revenue of a non-price-discriminating monopolist lies below the demand curve because b) the monopolist must lower the price on all units sold in order to sell additional units. The marginal revenue lies below the demand curve because the monopoly is a price-maker.