If a monopolist faces a straight-line downward sloping demand curve, the price of the units it sells is always:
A) greater than the average revenue.
B) equal to marginal revenue.
C) greater than marginal revenue.
D) less than the average revenue.

Question

Quizplus · Accepted Answer

In a monopoly, the demand curve is also the average revenue curve, and marginal revenue is less than average revenue because the monopolist must lower the price to sell additional units.

If a Monopolist Faces a Straight-Line Downward Sloping Demand Curve