In which of the following market models do demand and marginal revenue diverge?

Question

Quizplus · Accepted Answer

In pure monopoly, oligopoly, and monopolistic competition, firms face downward-sloping demand curves, meaning as they increase output, they must lower the price to sell additional units. This causes marginal revenue (the additional revenue from selling one more unit) to be less than the price, leading to a divergence between demand and marginal revenue. In pure competition, firms are price takers with a perfectly elastic demand curve, so demand and marginal revenue do not diverge and are equal to the market price.

In Which of the Following Market Models Do Demand and Marginal