{"id":208778,"date":"2025-04-28T06:05:31","date_gmt":"2025-04-28T06:05:31","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=208778"},"modified":"2025-04-28T06:05:33","modified_gmt":"2025-04-28T06:05:33","slug":"the-monopolists-marginal-revenue-curve","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/04\/28\/the-monopolists-marginal-revenue-curve\/","title":{"rendered":"The monopolist’s marginal revenue curve"},"content":{"rendered":"\n

The monopolist’s marginal revenue curve
A doesn’t exist.
B lies below the demand curve.
C is identical to the demand curve.
D lies above the demand curve.<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is B: lies below the demand curve.<\/strong><\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

In a monopolistic market, a monopolist is the sole seller of a good or service, meaning that they have significant control over the market price. Because they are the only producer, they face a downward-sloping demand curve, indicating that as the price of the good decreases, the quantity demanded increases.<\/p>\n\n\n\n

The marginal revenue (MR)<\/strong> is the additional revenue the monopolist earns from selling one more unit of the good. The key difference between the monopolist’s marginal revenue curve and the demand curve lies in how they are constructed.<\/p>\n\n\n\n

    \n
  1. Demand Curve vs. Marginal Revenue Curve:<\/strong>\n
      \n
    • The demand curve<\/strong> shows the price at which the monopolist can sell each unit of the product at different levels of output. It is typically downward sloping, meaning that the monopolist must lower the price to sell more units.<\/li>\n\n\n\n
    • The marginal revenue curve<\/strong>, however, shows how much revenue the monopolist gains from selling one additional unit of output. Because the monopolist faces a downward-sloping demand curve, in order to sell more units, they must lower the price not only for the new unit but also for all previously sold units. This creates a situation where marginal revenue is less than the price at each quantity of output, and as a result, the marginal revenue curve lies below the demand curve<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
    • The Relationship Between Price and Marginal Revenue:<\/strong>\n
        \n
      • For the monopolist to increase sales, they must lower the price of the good, which affects the revenue from all units sold. For instance, if a monopolist lowers the price of one unit, the price reduction applies not only to the additional unit but to all the units sold. As a result, marginal revenue decreases more quickly than price, causing the MR curve to be steeper and lie below the demand curve.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
      • Why It Cannot Be Above the Demand Curve:<\/strong>\n
          \n
        • The MR curve cannot lie above the demand curve because that would imply that each additional unit sold increases total revenue at a higher rate than the price itself, which contradicts the downward-sloping demand curve and basic economic principles.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n

          Therefore, the monopolist’s marginal revenue curve always lies below the demand curve, as each additional unit sold brings in less additional revenue than the previous unit, a consequence of the price reduction needed to increase quantity.<\/p>\n","protected":false},"excerpt":{"rendered":"

          The monopolist’s marginal revenue curveA doesn’t exist.B lies below the demand curve.C is identical to the demand curve.D lies above the demand curve. The correct answer and explanation is : The correct answer is B: lies below the demand curve. Explanation: In a monopolistic market, a monopolist is the sole seller of a good or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-208778","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/208778","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=208778"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/208778\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=208778"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=208778"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=208778"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}