We supposed that most firms can't engage in price discrimination, this means that they can't reasonably set a different price for each unit sold. In other words, they must sell all planned output at the same price. This means that any plans to expand output mean lowering the price of all units that are to be sold, not just the extra output. This, in turn, means that the marginal revenue of the added output must reflect the fact that all planned units are being sold at a lower price.

   The table below illustrates how marginal revenue (MR) works when a firm must reduce the price of all planned output if it wishes to increase sales. Notice that by the 6^th unit of output MR is only half of the market price.

1. There are substantial startup costs and other barriers to entry. This explains long run profitability, not MR < P.
2. The firm is able to practice perfect price discrimination. This would mean that MR=P at all levels of output, exactly the opposite of the statement.
3. Demand and marginal revenue have an inverse relationship. The two are directly related, indeed we learned that the two curves shift together and are both downward sloping.
4. Because monopolist always have higher production costs than other types of firms or industries. This isn't necessarily true, but even if it were it has nothing to do with marginal revenue which is entirely unrelated to costs.
5. The monopolist must reduce the price of all units of output, not just an additional unit, in order to increase sales.