10.1 A Single-Price Monopolist

Question 1

What is the difference in the demand curve for a monopoly vs competitive firms?

Answer 1

Unlike a perfectly competitive firm, a monopolist faces a negatively sloped demand curve

Question 2

what is average revenue for a monopoly?

Answer 2

Average revenue(AR) is total revenue divided by quantity
AR = TR/Q = (p*Q)/Q = p

Question 3

What is the difference in the marginal revenue (MR) for a monopoly vs competitive firms?

Answer 3

Because of the downward sloping demand curve, the monopolist must reduce the price that it charges on all units to sell an extra unit. So the price received for the extra unit sold is not the firm’s marginal revenue because by reducing the price on all previous units, the firm loses some revenue