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The marginal revenue of selling an additional unit of output for a price setter (hence within an imperfect market) is always less than market price.

Picture a downwards sloping market demand curve (hence individual monopolies demand curve); at P=6, Q=2, and at P=5, Q=3. To sell an additional unit of output, the firm must drop price from 6 to 5, meaning the total revenue will increase from (6x2)=12 to (5x3)=15. This increase in revenue (marginal revenue) is $3. Note $3 is not only smaller than the original price, but than the new price as well.

Hence, price is always greater than marginal revenue for a price setter.

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Q: What is the relationship in price and marginal revenue for price setters?
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