For a monopolist,________.

Question

Quizplus · Accepted Answer

For a monopolist, the marginal revenue (MR) curve lies below the demand or average revenue (AR) curve. This is because in order to sell more output, the monopolist must lower the price for all units sold, leading to a decrease in revenue per unit sold. Therefore, the monopolist faces a downward-sloping demand curve and has to lower the price in order to sell more units. As a result, the marginal revenue curve intersects the demand curve at a lower price and quantity than the corresponding price and quantity on the demand curve. Hence, the marginal revenue is always less than price, i.e., MR < P.

For a Monopolist,________