Why is the MR curve below the demand curve for monopoly?
Keeping this in view, why does a monopoly have a downward demand curve?
The monopolist faces the downward-sloping market demand curve, so the price that the monopolist can get for each additional unit of output must fall as the monopolist increases its output. The downward-sloping market demand curve indicates that the new market price will be lower than before.
Secondly, what is the relationship between a monopolist's demand curve and the market demand curve? A monopolist's marginal revenue curve has twice the slope of its demand curve, because to sell more output, a monopoly must lower price. This is the correct answer. E. A monopolist's demand curve is downward sloping and its marginal revenue curve is upward sloping upward sloping .
Additionally, why MR is below AR in Monopoly?
The truth is that MR is less than p or AR in monopoly. This is so because p must be lowered to sell an extra unit. In contrast, the monopoly firm is faced with a negatively sloped demand curve. So, it has to reduce its p to be able to sell more units.
Why is the pure monopolist's demand curve not perfectly inelastic?
-pure monopolist is downsloping because the firm's supply is so small a part of the total industry supply that it cannot affect the price. -perfectly inelastic because MR < MC when demand is inelastic, so the price would be falling. -perfectly inelastic because MR is negative when demand is inelastic, so MR = MC < 0.