The marginal revenue curve faced by a perfectly competitive firm

Posted By Admin @ September 03, 2022


Explain why the marginal revenue curve facing a competitive firm differs from the marginal revenue curve facing a monopolist. unlike for perfectly competitive? firms, whose marginal revenue curves are the same as their individual demand? curves, a? monopolist's marginal revenue curve differs from its demand curve because


The correct answer to this question is that:

In a monopoly, “the monopolist must lower the price on all units to sell one more unit of output”.

This means that in a monopoly market, if we increase the amount of output without lowering the price, the marginal revenue decreases. Therefore marginal revenue is indirectly proportional to number of outputs.

In a perfect competition however, the marginal revenue is constant to any amount of output.


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