Question

How do marginal revenue and average revenue curves look like under monopoly and monopolistic competition?

Answer 1

Answer:

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Explanation:

Since he charges a single price for all the units he sells, the average revenue per unit is identical to the price. Therefore, the market demand curve = the average revenue curve for the monopolist. In a perfect competition, the marginal and average revenues are identical.

However, in the case of a monopoly, this is not true since a monopolist must reduce the price of his product to achieve higher sales. Here are some observations from the table above

The monopolist cannot sell any unit for Rs. 10.

If he wants to sell 10 units, then the price cannot be higher than Rs. 5 per unit