Monopoly

Why does marginal revenue (MR) slope down in a price discriminating monopoly?

Expert Solution

The MR slopes down in a price discriminating monopoly because when monopolies lower the price in order to sell more units, they have to lower the price for all units, including the units they could have sold for more profit.

Thus, more demand means lowering the price more and hence less MR.

Foe a price discriminating monopoly, more demand means lowering price which leads to less MR.

Joes answered 3 years ago

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