The wholesale demand for a monopoly retailer depends of the retailer's marginal revenue.

Question

Quizplus · Accepted Answer

A monopoly retailer has control over the price of its products and therefore its marginal revenue directly affects the wholesale demand for its products. If the retailer sets a high price (resulting in a small quantity demanded and high marginal revenue), the demand from wholesale buyers will be lower. On the other hand, if the retailer sets a lower price (resulting in a larger quantity demanded and lower marginal revenue), the demand from wholesale buyers will be higher.

The Wholesale Demand for a Monopoly Retailer Depends of the Retailer's