Graphically,the marginal revenue curve of a monopolist:
A) lies below the demand curve of a monopolist.
B) is the same as the demand curve of a monopolist.
C) lies above the demand curve of a monopolist.
D) is the same as the marginal cost curve of a monopolist.

Question

Quizplus · Accepted Answer

The marginal revenue curve shows how much revenue the firm receives from selling each additional unit of output. In the case of a monopolist, the marginal revenue curve lies below the demand curve because the monopolist must lower the price on all units sold in order to sell an additional unit. This means that the monopolist's marginal revenue is always lower than the price at which it sells its output, and thus the marginal revenue curve is below the demand curve.

Graphically,the Marginal Revenue Curve of a Monopolist