For a monopoly producing any output level greater than one,the marginal revenue curve:
A) is minimized when total revenue is maximized.
B) lies above the average revenue curve.
C) lies below the demand curve.
D) is the same as the demand curve.

Question

Quizplus · Accepted Answer

The marginal revenue curve for a monopoly lies below the demand curve because the monopoly must lower the price of all units sold to increase the output level. This is because it is the only supplier in the market and must lower the price to sell more units. As a result, the additional revenue from selling an additional unit is less than the price charged for the unit, leading to a downward-sloping marginal revenue curve that lies below the demand curve.

For a Monopoly Producing Any Output Level Greater Than One,the