For a pure monopoly, the slope of the marginal revenue curve and the demand curve are the same.Question 22Select one:TrueFalse

Answer Explanation

In a pure monopoly, the relationship between the demand curve and the marginal revenue (MR) curve is a fundamental concept in microeconomics.

1. Understanding Demand and Marginal Revenue:

   • The demand curve shows how much quantity of a good consumers are willing to purchase at different price levels.
   • The marginal revenue curve represents the additional revenue that a firm earns when it sells one more unit of a good.

2. Monopoly Characteristics:

   • A monopolist faces a downward-sloping demand curve. To sell additional units, the monopolist must lower the price, which means that marginal revenue increases at a decreasing rate.

3. Slope Difference:

   • Specifically, the marginal revenue curve for a monopolist is steeper than the demand curve. This occurs because to sell more units, the monopolist must reduce the price for all units sold, not just the additional units.

Conclusion

Thus, the statement is False. The slopes of the marginal revenue curve and the demand curve are not the same in a pure monopoly; the MR curve is typically below the demand curve and has a steeper slope.