For a monopoly, the marginal revenue curve is located below which curve?

• A. Demand curve
• B. Average total cost curve
• C. Supply curve
• D. Marginal cost curve

Answer: (A)

Verified step by step guidance

1. Recall that a monopoly faces the entire market demand curve, which shows the price consumers are willing to pay at each quantity.
2. Understand that the marginal revenue (MR) curve represents the additional revenue the monopolist earns from selling one more unit of output.
3. Recognize that because the monopolist must lower the price to sell additional units, the marginal revenue is less than the price, causing the MR curve to lie below the demand curve.
4. Note that the average total cost curve and marginal cost curve relate to costs, not revenue, so the MR curve is not below these curves.
5. Conclude that the marginal revenue curve is located below the demand curve for a monopoly.