The demand curve for a firm operating in a monopoly market is the same as _____.
A)its average revenue curve
B)the industry supply curve
C)its marginal revenue curve
D)its marginal cost curve

Question

Quizplus · Accepted Answer

In a monopoly market, the firm is the only seller and therefore the demand curve is the same as the average revenue curve. This is because the firm has control over the price and can sell at any price it wants, but it also has to consider the effect on the quantity demanded. Therefore, the demand curve for a monopoly firm is downward sloping, just like the average revenue curve. The marginal revenue curve for a monopoly firm is below the demand curve due to the diminishing returns of selling more units at a higher price. The industry supply curve is not applicable to a monopoly market, as there is only one firm operating. The marginal cost curve is also not the same as the demand curve since it represents the additional cost of producing each unit of output.

The Demand Curve for a Firm Operating in a Monopoly