The marginal revenue curve for a single-price monopoly
A)is below its demand curve.
B)is the same as the demand curve.
C)lies above its demand curve.
D)is horizontal.
E)has a slope equal to the slope of the demand curve.

Question

Quizplus · Accepted Answer

The marginal revenue curve for a single-price monopoly is below its demand curve because the monopoly must lower its price to sell more units of output. As a result, the additional revenue gained from selling an extra unit is less than the price the monopoly must lower to sell that extra unit. So, the marginal revenue curve slopes downward and is below the demand curve.

The Marginal Revenue Curve for a Single-Price Monopoly