Which of the following best describes the marginal revenue curve of a monopolist graphically?
A) It lies above the demand curve of a monopolist.
B) It lies below the demand curve of a monopolist.
C) It is the same as the marginal cost curve of a monopolist.
D) It is the same as the demand curve of a monopolist.

Question

Quizplus · Accepted Answer

The marginal revenue curve of a monopolist lies below the demand curve because the monopolist must lower the price of all units sold in order to sell an additional unit of output. This means that the revenue from selling an additional unit (marginal revenue) is less than the price of the previous units sold.

Which of the Following Best Describes the Marginal Revenue Curve