The marginal revenue curve for a monopoly firm starts at the same point on the vertical axis as the

Question

Quizplus · Accepted Answer

(i) is true because the marginal revenue at the start is equal to the price of the first unit sold, which is the only unit that the monopolist has to lower the price for.

(iii) is also true because the marginal revenue curve slopes downwards, which means that the marginal revenue for each additional unit sold is decreasing. This is because the monopolist has to lower the price for each additional unit sold in order to increase sales, and this decrease in price leads to a decrease in marginal revenue.

(ii) is not true because the marginal revenue curve does not intersect with the horizontal axis, as the monopolist only sells positive quantities of output.

The Marginal Revenue Curve for a Monopoly Firm Starts at the Same