Principles of Microeconomics / Unit 8 MIC 0712 short lesson, about 20 seconds
Marginal Revenue Below Price
Captions available
The idea
One more unit brings in its price but loses revenue on every earlier unit now sold for less, so a monopolist's marginal revenue is below price and can turn negative.
In practice
A third unit at seven instead of two at eight adds seven, gives back two: five.
Where people slip
Marginal revenue below price is the mark of every price setter, not only a monopolist.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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