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Sagot :
For a monopolist, marginal revenue is negative when the price effect is greater than the output effect. So b. is the correct option.
A monopolist is a firm that is a single seller of a particular commodity or service in the market. This lack of competition and lack of substitute goods or services means the monopolist wields enough power in the marketplace to charge high prices. Due to market dominance and market power, the firm can determine the price independently.
To increase the sale of the output, the firm has to reduce the price of the commodity. That is why the marginal (revenue earned on an additional commodity), abbreviated as MR, is downward sloping. The MR can be positive as well as negative depending on two effects: price effect and output effect.
Learn more about monopoly in business here:
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