If the demand curve for a single price monopolist always is a downward sloping straight line, then marginal revenue will be
A)a straight line with a negative slope of twice the demand curve slope.
B)a straight line with a negative slope of one-half the demand curve slope.
C)identical to the demand curve.
D)a horizontal line.

Question

Quizplus · Accepted Answer

Marginal revenue for a single price monopolist with a downward sloping straight line demand curve is also a straight line with a negative slope, but it has twice the slope of the demand curve. This is because as quantity increases, the monopolist must lower the price not only for the additional units sold but also for all previous units, leading to a steeper decline in revenue per unit increase in quantity sold.

If the Demand Curve for a Single Price Monopolist Always