Which of the following is true for a monopoly firm?
A)The monopolist's demand curve is downward-sloping and the marginal revenue curve lies above the demand curve.
B)The monopolist's demand curve is upward-sloping and is the same as the marginal revenue curve.
C)The monopolist's demand curve is downward-sloping and the marginal revenue curve lies below the average revenue curve.
D)The monopolist's demand curve is upward-sloping and is the same as the total revenue curve.

Question

Quizplus · Accepted Answer

A monopolist's demand curve is indeed downward-sloping, reflecting the inverse relationship between price and quantity demanded. The marginal revenue curve lies below the demand (average revenue) curve because, to sell additional units, the monopolist must lower the price, which applies to all units sold, thus reducing the revenue gained from selling additional units.

Which of the Following Is True for a Monopoly Firm