Asked by Dayna McCormick on May 09, 2024

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With respect to the pure monopolist's demand curve,it can be said that:

A) the stronger the barriers to entry,the more elastic is the monopolist's demand curve.
B) price exceeds marginal revenue at all outputs greater than 1.
C) demand is perfectly inelastic.
D) marginal revenue equals price at all outputs.

Marginal Revenue

The additional income gained from selling one more unit of a product or service.

Monopolist's Demand Curve

The demand curve faced by a monopolist, which is the same as the market demand curve, indicating that the monopolist can set the price only by choosing the quantity to produce.

Elastic

Describes a situation in which the demand or supply for a product changes significantly when its price changes.

  • Comprehend the relationship between demand, marginal revenue, and pricing strategies in monopoly.
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Gissel FierrosMay 12, 2024
Final Answer :
B
Explanation :
The demand curve for a monopolist is downward sloping, meaning as price decreases, quantity demanded increases. This results in a situation where, for all outputs greater than one, the price (what consumers are willing to pay for the next unit) exceeds the marginal revenue (the additional revenue the firm makes from selling one more unit). This discrepancy occurs because to sell more units, a monopolist must lower the price on all units sold, not just the additional unit, thus reducing the revenue gained from previously sold units. Choices A, C, and D are incorrect descriptions of a monopolist's demand curve characteristics.