The marginal revenue curve for a monopolist is
A)always above the demand curve.
B)generally below the average cost curve.
C)always above the average revenue curve.
D)always below the demand curve.

Question

Quizplus · Accepted Answer

The marginal revenue curve for a monopolist is always below the demand curve because the monopolist has market power to influence the price of their product, resulting in a downward-sloping demand curve. As the monopolist decreases the price to sell more units, the marginal revenue received from each additional unit sold is lower than the price received for the previous unit, hence the marginal revenue curve is below the demand curve.

The Marginal Revenue Curve for a Monopolist Is