For a monopoly producing a certain amount of output, is the statement "Price is less than marginal revenue" true or false?

In a monopolistic market, the relationship between price and marginal revenue is distinct from that in competitive markets. For a monopolist, the price charged for a product is always higher than the marginal revenue of producing an additional unit. This occurs because a monopolist faces a downward-sloping demand curve; in order to sell more units, the monopolist must lower the price, not just for the additional unit, but for all preceding units sold.

As a result, when the monopolist decides on the quantity to produce, the price they can charge (which corresponds to the demand curve) is always higher than the additional revenue they gain from selling one more unit. Thus, the statement "Price is less than marginal revenue" is false, as marginal revenue is less than price in a monopolistic setting. Therefore, the correct answer accurately reflects this fundamental principle of monopolistic pricing.