Question

What is the shape of the monopolist’s marginal revenue curve?

a. a downward-sloping line that lies below the demand curve
b. a horizontal line that lies below the demand curve
c. a downward-sloping line that is identical to the demand curve
d. a horizontal line that is identical to the demand curve

Answer 1

(b) A horizontal line that lies below the demand curve

Step-by-step explanation:

• Marginal revenue of a monopolist is in every case less or equivalent to the cost of the good.
• In the event that the monopolist needs to sell extra units of output he must diminish the cost.
• This diminish the marginal revenue earned by the monopolist.
• Since for each extra output he sells, he is compelled to decrease the cost to a similar amount
• So the monopolists marginal revenue income curve is descending sloping