Question

In a monopoly, marginal revenue is below demand because?

1) the demand function is downward sloping
2) the demand function is flat
3) the supply function is flat
4) the supply function is downward sloping

Answer 1

The marginal revenue curve for a monopolist is always below the market demand curve because the demand curve is downward-sloping.

Step-by-step explanation:

The marginal revenue curve for a monopolist always lies beneath the market demand curve. This is because the demand curve is downward-sloping. When a monopolist increases the quantity along the demand curve by one unit, they have to lower the price slightly to sell that additional unit.