Graph 15-4 This graph depicts the demand and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s).
-Refer to Graph 15-4.The marginal revenue curve will be:
A)steeper than the demand curve
B)of equal gradient as the demand curve
C)flatter than the demand curve
D)in some places steeper and in others flatter than the demand curve

Question

Graph 15-4  This graph depicts the demand and marginal-cost curves of a profit-maximising monopolist.Use the graph to answer the following question(s).
-Refer to Graph 15-4.The marginal revenue curve will be:
A)steeper than the demand curve 
B)of equal gradient as the demand curve 
C)flatter than the demand curve 
D)in some places steeper and in others flatter than the demand curve

Quizplus · Accepted Answer

The marginal revenue curve for a monopolist (or any firm with market power) is always steeper than the demand curve because for each additional unit sold, the firm must lower the price not just for that unit but for all previous units sold as well, leading to a decrease in marginal revenue at a faster rate than the decrease in price.

Graph 15-4 This Graph Depicts the Demand and Marginal-Cost