For the monopoly firm that does not engage in perfect price discrimination,
A)the marginal revenue curve lies below the demand curve.
B)the marginal revenue curve and demand curve are the same.
C)the marginal revenue curve lies above the demand curve.
D)marginal revenue equals price.

Question

Quizplus · Accepted Answer

In a monopoly firm that does not engage in perfect price discrimination, the firm faces a downward sloping demand curve. As the firm increases the quantity sold, the price must decrease to induce consumers to buy more. This means that the marginal revenue earned on each additional unit sold is less than the price. Therefore, the marginal revenue curve lies below the demand curve.

For the Monopoly Firm That Does Not Engage in Perfect