A non-discriminating monopolist's marginal revenue curve lies below its demand curve because
A)economists put it there by convention
B)in order to earn more profit,the monopolist must charge higher prices
C)a monopolist gouges its customers
D)in order to increase their profits,monopolists must produce in the inelastic range of the demand curve
E)in order to increase the number of units sold,the firm must lower the price on all units sold

Question

Quizplus · Accepted Answer

A non-discriminating monopolist must lower the price on all units sold to sell additional units, causing marginal revenue to be less than the price, hence the marginal revenue curve lies below the demand curve.

A Non-Discriminating Monopolist's Marginal Revenue Curve Lies Below Its Demand