Explain why the marginal revenue is less than average revenue for a monololy firm ?

Marginal revenue is less than average revenue for a monopoly firm because monopolist can sell more only by lowering the price of his product. Under monopoly, as output increases both AR and MR fall. However, AR remains greater than MR at all levels of output . Graphically, both AR curve and MR curve are downward sloping but the AR curve remains above the MR curve.

  • 3

because marginal revenue falls at twice the rate of average revenue.

  • 0
What are you looking for?