For a monopolist, marginal revenue will turn negative when:

Question

BlackTom AI · Accepted Answer

When analyzing a monopolist's marginal revenue, we consider two competing forces as output changes. 
Option d: 'the price effect on revenue is greater than the output effect' means that lowering the price to sell one more unit reduces total revenue from the already-sold units by more than the additional unit's revenue adds. In other words, the gain from selling an extra unit is outweighed by the loss from lowering the price on all prior units, driving MR down and eventually negative as output continues to rise.
If the price effect dominates the output effect, each additional unit sold reduces total revenue, causing marginal revenue to be negative. This aligns with the standard intuition for a downward-sloping demand curve: after theRevenue gained from selling one more unit is offset by the price drop on all units sold, MR can fall below zero.
Other potential statements one might encounter typically compare the two components—price effect and output (quantity) effect. If the price effect were smaller than or balanced by the output effect, MR could be positive or zero. If the price effect dominates, MR would be negative, which is exactly what option d asserts. 
Note: since the other answer options are not provided in the prompt, we cannot analyze them individually here, but the given option describes the classic condition under which marginal revenue becomes negative for a monopolist.

MCD2020 - T1 - 2025 Tutorial Quiz 8 - Monopoly

For a monopolist, marginal revenue will turn negative when:

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