A Monopoly's Marginal revenue A monopolist's marginal revenue is always less than the price of its good The demand curve is downward sloping When a monopoly drops the price to sell one more unit, the revenue received from previously sold units also decreases o When a monopoly increases the amount it sells, it has two effects on total revenue(Px Q) The output effect-more output is sold, so Q is higher The price effect-price falls, so P is lowerA Monopoly’s Marginal Revenue • A monopolist’s marginal revenue is always less than the price of its good. – The demand curve is downward sloping. – When a monopoly drops the price to sell one more unit, the revenue received from previously sold units also decreases. • When a monopoly increases the amount it sells, it has two effects on total revenue (P x Q). – The output effect—more output is sold, so Q is higher. – The price effect—price falls, so P is lower