A monopolist's marginal revenue curve is
A) the same as a perfectly competitive firm's marginal revenue curve.
B) higher than the monopolist's demand curve.
C) below the firm's demand curve.
D) a horizontal line at the market price.

Question

Quizplus · Accepted Answer

A monopolist's marginal revenue curve is below the firm's demand curve. This is because the monopolist must lower the price of all units to sell one more unit, so the marginal revenue earned on that unit will be less than the original price. Therefore, the marginal revenue curve will be less steep than the demand curve and below it.

A Monopolist's Marginal Revenue Curve Is