A monopoly's marginal revenue curve
A)slopes upward.
B)lies above the marginal cost curve at all points.
C)is horizontal.
D)is vertical.
E)lies below the average revenue curve.

Question

Quizplus · Accepted Answer

A monopoly's marginal revenue curve lies below the average revenue curve because, to sell additional units, a monopoly must lower the price, which decreases the revenue gained from selling additional units. This relationship results from the downward-sloping demand curve that monopolies face, where price decreases as quantity increases.

A Monopoly's Marginal Revenue Curve