The marginal revenue curve of a monopolist is
A) downward sloping and below the demand curve.
B) downsloping and identical to the demand curve.
C) downsloping and above the demand curve.
D) horizontal and same as the market demand curve.

Question

Quizplus · Accepted Answer

The marginal revenue curve of a monopolist is always downward sloping, but it is below the demand curve because the monopolist has market power to charge a higher price than the competitive level. This means that each additional unit sold will have a lower price than the previous unit, causing the marginal revenue to be lower than the price.

The Marginal Revenue Curve of a Monopolist Is