For a monopolist, the average revenue (AR) curve is
Answer Details
The average revenue (AR) curve for a monopolist is above the marginal revenue (MR) curve. This is because a monopolist has the power to influence the market price of their product by controlling the quantity supplied.
Unlike a perfectly competitive market, where the market sets the price and individual firms must take it or leave it, a monopolist can charge a higher price by restricting output. Therefore, the demand curve faced by a monopolist is downward sloping, meaning that to sell more units of output, the monopolist must lower the price for all units sold.
As a result, the AR curve will be above the MR curve, since each additional unit sold will not only generate revenue at the market price but will also lower the price for all units sold. In other words, the monopolist must lower the price for all units sold to sell one more unit, which means that the average revenue per unit sold is lower than the price for the last unit sold.