MCQs · Q2
Q.Under monopoly, a firm's Average Revenue (AR) curve
(a) is horizontal and equal to Marginal Revenue (MR) at every output
(b) slopes downward, and lies above the MR curve at every output
(c) is identical to the industry's supply curve
(d) is always equal to Marginal Cost (MC)
Maharashtra MsbshseTextbookSubjectiveImportance★★★★★
5% · 2/43 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Because the monopolist is the sole seller, its downward-sloping demand curve is also its Average Revenue (AR) curve. Selling one extra unit requires lowering the price on all units sold (assuming a single uniform price), so the extra (marginal) revenue from that unit is always less than the average price — meaning the Marginal Revenue (MR) curve lies below, and falls faster than, the AR curve at every level of output.
Option-by-option analysis:
- (a) is horizontal and equal to MR at every output — incorrect; this describes a price taker under perfect competition, not a monopolist.
- (b) slopes downward, and lies above the MR curve at every output — correct; this is exactly the AR-MR relationship under monopoly. …
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.