The marginal revenue curve in monopoly ?
Correct answer: D. Lies below and diverges from the demand curve
- A. Equals the demand curve
- B. Is parallel with the demand curve
- C. Lies below and converges with the demand curve
- D. Lies below and diverges from the demand curve
Explanation
A monopolist must lower its price to sell additional output, so marginal revenue lies below the demand curve. With the usual downward-sloping linear demand diagram, the two curves diverge as output increases.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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