The monopoly's marginal revenue curve
A)is equivalent to its demand curve
B)lies below its demand curve
C)is perfectly elastic
D)is perfectly inelastic
E)has a positive slope

Question

Quizplus · Accepted Answer

A monopoly's marginal revenue curve lies below its demand curve because in order to sell more units of the good, the monopoly must decrease the price for all units sold, leading to a lower marginal revenue for each additional unit sold. This results in a downward sloping marginal revenue curve that lies below the demand curve.

The Monopoly's Marginal Revenue Curve