Describe the marginal revenue curve in relationship to the demand curve for a monopoly. Why is it like that?
What will be an ideal response?
The marginal revenue curve lies below the demand curve because the monopolist must decrease price in order to sell more output. Therefore each additional unit sold yields its price less the decreased price for each previous unit sold.
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What are two ways that a government or group can ensure that the economic pie is maximized when the volunteer's dilemma arises?
What will be an ideal response?
Refer to the diagram. The movement down the production possibilities curve from point A to point E suggests that the production of:
A. computers, but not bicycles, is subject to increasing opportunity costs.
B. bicycles, but not computers, is subject to increasing opportunity costs.
C. both bicycles and computers is subject to constant opportunity costs.
D. both bicycles and computers is subject to increasing opportunity costs.