In a pure monopoly,
Blank
______ is less than the price for every unit of output except the first.

Question

In a pure monopoly, 
Blank
______ is less than the price for every unit of output except the first.

BlackTom AI · Accepted Answer

The question asks about a characteristic relationship in a pure monopoly and provides four options to choose from.
Option 1: total revenue
This statement would imply a comparison between total revenue and the price per unit, which is not a standard or meaningful way to describe how TR relates to price. Total revenue is the total amount earned from all units sold, while price is the per-unit charge; there is no general rule that TR is less than the price for any unit. Therefore this option does not capture the typical monopoly relationship and is not correct.
Option 2: marginal cost
Marginal cost is the cost of producing one more unit. In a monopoly, MR is the key comparison to price because the firm faces a downward-sloping demand curve. There is no universal rule that marginal cost is less than the price for every unit except the first. The relation between MR and MC depends on the profit-maximizing output and is not described by the given statement. Hence this option is incorrect.
Option 3: average total cost
Average total cost is the cost per unit at a given output level. While ATC can be lower or higher than price depending on the firm’s position relative to its cost curves and demand, the standard monopoly characteristic highlighted in theory concerns marginal revenue in relation to price, not ATC. Therefore this option does not fit the described property and is incorrect.
Option 4: marginal revenue
In a monopoly with a downward-sloping demand curve, the marginal revenue curve lies below the demand (price) curve. Consequently, MR is less than the price for every unit of output except the very first unit, where MR equals the price. This captures the classic reason why monopolists must lower price on all units to sell an additional unit, leading to MR < price for all subsequent units. This option aligns with the standard explanation and is the correct characterization.

In a pure monopoly, Blank ______ is less than the price for every unit of output except the first.

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Marginal revenue is the change in Blank ______ revenue associated with a single-unit change in output.

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