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WAEC Economics 2006 Question 25

Question 25

Market Structures

For a monopolist, the average revenue (AR) curve is

  1. A.above the total cost curve
  2. B.the same as the marginal cost curve
  3. C.above the marginal revenue curve
  4. D.the same as that of the perfect competitor.
Show the answer and explanation

Answer: C (above the marginal revenue curve)

Explanation

A monopolist must cut price to sell more, so MR falls faster than AR and the AR curve lies above the MR curve.