If a monopoly firm sells to competitive distributors and the distributors have a constant marginal cost, the difference between the wholesale demand curve and the consumer retail demand curve is the______.
A)marginal cost of distribution
B)average fixed cost of distribution
C)marginal cost of production
D)marginal revenue of production

Question

Quizplus · Accepted Answer

The difference between the wholesale demand curve and the consumer retail demand curve represents the additional cost of distribution. This is because the wholesale demand curve reflects the price that the distributor is willing to pay for the goods, which includes the cost of distribution, while the consumer retail demand curve reflects the price that the end consumer is willing to pay for the goods. Therefore, the difference between these two curves represents the additional cost of distribution that the distributor incurs in order to get the goods to the end consumer. This additional cost is the marginal cost of distribution.

If a Monopoly Firm Sells to Competitive Distributors and the Distributors