WAEC SSCE - Economics - 2006 (Objective)

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The mechanism which allows the price of a commodity to be fixed either above or below the equilibrium is known as "price control." Price control refers to government policies or regulations that set a specific price ceiling or floor for a particular commodity or service. When the government sets a price ceiling, it means that the price cannot be charged beyond a certain limit. This often results in a shortage of the commodity or service, as the quantity demanded exceeds the quantity supplied at the artificially low price. On the other hand, a price floor means that the price cannot fall below a certain level. This often leads to a surplus of the commodity or service, as the quantity supplied exceeds the quantity demanded at the artificially high price. Overall, price controls can lead to inefficiencies in the market and unintended consequences, such as black markets or decreased incentives for producers to supply the commodity or service.

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Standardization of products or services refers to the process of establishing a set of uniform specifications, features, and characteristics for a product or service, such that it meets a certain level of quality and consistency. This allows for the product or service to be produced or delivered in a consistent and efficient manner, regardless of the location or personnel involved. This feature is often associated with large firms, which have the resources and expertise to develop and implement standardized processes and procedures. Small firms may also engage in standardization to improve their competitiveness and efficiency. Retailers and wholesalers are primarily concerned with the distribution of products and may not be directly involved in the standardization process.

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One of the functions of the International Monetary Fund (IMF) is to provide financial assistance to member states that are experiencing temporary difficulties in their balance of payments. This means that the IMF may provide loans or other forms of financial support to member countries that are struggling to pay for their imports and meet their international obligations. The IMF may also provide policy advice to these countries in order to help them address the underlying causes of their balance of payments difficulties and improve their economic performance. Overall, the IMF's role is to promote international monetary cooperation and exchange rate stability, facilitate balanced growth of international trade, and assist in the sustainable economic development of its member countries.

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The amount proposed for payment of wages and salaries in a budget is regarded as part of recurrent expenditure. Recurrent expenditure refers to the routine expenses that a government or organization incurs on a regular basis to keep its operations running, such as salaries, maintenance costs, and other recurring expenses. In contrast, direct investment refers to the money spent on buying or creating assets that will generate income in the future, such as buying a new factory or investing in a startup company. Recurrent revenue refers to the regular income that an organization or government receives, such as taxes, fees, and other sources of income. Finally, capital receipts refer to the money that an organization or government receives from the sale of its assets or from borrowing money.

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When the price of a commodity rises, the demand for the commodity will generally fall. This is because as the price of the commodity becomes more expensive, consumers are less likely to buy it or may look for substitutes that are cheaper. As a result, the demand for the commodity decreases. However, this may also incentivize producers to increase the supply of the commodity, as they are able to make more profit from selling it at a higher price. Overall, the relationship between price and demand/supply in the market can be complex and influenced by many factors, including consumer preferences, production costs, and availability of substitutes.

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The formula index of export prices/index of import prices * 100 is used to measure the commodity terms of trade between two countries. Commodity terms of trade refers to the ratio of the price of a country's exports to the price of its imports. This formula takes into account the prices of goods that are both imported and exported between two countries, and expresses their relationship as an index. If the resulting number is greater than 100, it means that the country's exports are becoming more expensive relative to its imports. Conversely, if the number is less than 100, it means that the country's exports are becoming cheaper relative to its imports. Therefore, this formula is used to gauge the relative strength of a country's exports compared to its imports and can have an impact on a country's balance of payments and overall economic health.

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The economic system in which the state takes the economic decisions through detailed planning is called socialism. In a socialist system, the government owns and controls the means of production, such as factories and natural resources, and makes decisions on how to allocate resources and distribute goods and services to the people. The goal of socialism is to promote social and economic equality by ensuring that everyone has access to basic necessities, such as food, shelter, and healthcare, regardless of their income or social status.

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The tendency for prices to rise while the value of money falls is known as inflation. Inflation refers to a sustained increase in the general price level of goods and services in an economy over a period of time. When inflation occurs, the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods and services than before. For example, if the price of a loaf of bread was $1 last year and it is now $1.10, the value of money has decreased, and inflation has occurred. This is because it now takes more money to buy the same amount of bread. Depreciation, on the other hand, refers to a decline in the value of an asset, such as a currency, over time. Deflation is the opposite of inflation and refers to a sustained decrease in the general price level of goods and services in an economy.

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The form of tax evasion is wrong declaration of earnings. This means intentionally reporting an incorrect amount of income to the government in order to pay less taxes or avoid paying taxes altogether. For example, someone might fail to report all of the income they earned from their job, or they might overstate their deductions in order to reduce their taxable income. This is illegal and can result in penalties or even criminal charges. Payment of flat rate tax, constant change of employment, and low capacity utilization are not necessarily forms of tax evasion. Flat rate tax is a legitimate tax system where everyone pays the same rate regardless of their income level. Constant change of employment and low capacity utilization may have tax implications, but they are not inherently illegal or fraudulent.

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In a rapidly growing economy, a change in technology that is labor-saving is likely to cause structural unemployment. Structural unemployment occurs when workers' skills are no longer in demand because technology has replaced them. This means that the new technology is more efficient and can do the job better than the workers. As a result, these workers may struggle to find new jobs in the same field and may need to retrain or acquire new skills to remain employable. Structural unemployment can be a challenging issue for a growing economy because it can lead to income inequality and social unrest.

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An owner-manager of a firm can also be called an "entrepreneur". An entrepreneur is someone who starts and runs their own business, taking on financial risk in the hopes of making a profit. As an owner-manager, the entrepreneur has a personal stake in the success of the firm. They have invested their own money, time, and effort into building and growing the business. This is different from someone who is just a shareholder or investor in the company, as they are not involved in the day-to-day operations of the business. The owner-manager is responsible for making key decisions about the direction of the company, such as which products or services to offer, how to market them, and how to manage finances. They are also responsible for managing employees, setting goals and objectives for the company, and ensuring that the business is profitable. Overall, the term "entrepreneur" is a fitting label for an owner-manager because it captures the idea of someone who takes on risk in order to create and grow a business, while also highlighting the importance of innovation, creativity, and hard work in the world of business.

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In order to correct a deficit balance of payment, a country may decide to increase its domestic production. This means that the country would focus on producing more goods and services within its own borders, which would reduce the need for imports from other countries. By reducing imports, the country can improve its balance of payments by decreasing the amount of money that it is sending out of the country. Increasing imports, on the other hand, would worsen the balance of payments deficit, as more money would be flowing out of the country to pay for goods and services from other nations. Domestic expenditure, such as spending by consumers and businesses, may have an impact on the balance of payments, but it is not a direct solution to correcting a deficit balance of payments. Finally, imposing a tax on infant industries, which are newly established domestic businesses, would likely harm the country's economy rather than improve the balance of payments. These industries need support and protection to grow and compete with established foreign industries, and imposing a tax on them could hinder their development.

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A debenture holder is entitled to payment in the form of interest. Interest is the money paid by a borrower to a lender as compensation for the use of the lender's money. When you hold a debenture, you are essentially loaning money to a company, and the interest paid on the debenture is the company's way of compensating you for the use of your money. In other words, the company is paying you interest as a way of "renting" your money. This interest payment is usually made at regular intervals, such as annually or semi-annually, until the debenture reaches maturity and the principal amount is repaid.

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Advertising expenses would not be necessary under perfect competition because consumers would have complete knowledge of goods. In a perfectly competitive market, there are many firms selling the same product, and consumers have access to all the information they need to make informed purchasing decisions. Therefore, advertising would not be necessary to inform consumers about the product or to differentiate one firm's product from another's.

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Mining is an example of primary production. Primary production involves the extraction and harvesting of natural resources from the environment. In the case of mining, natural resources such as minerals, metals, coal, and oil are extracted from the earth. These raw materials are then processed and transformed into products that can be used by industries and consumers. Secondary production involves the manufacturing and processing of raw materials into finished products, while tertiary production involves the provision of services such as transportation, education, and healthcare. Advanced production is not a commonly used term in economics, but it may refer to production methods that involve advanced technology and innovation.

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A mixed economy combines the characteristics of both planned and capitalist economies. In a planned economy, the government controls all aspects of the economy, including production and distribution of goods and services. In a capitalist economy, individuals and private companies own and control the means of production, and prices are determined by supply and demand in the market. In a mixed economy, both private individuals and the government play a role in the economy. Private individuals and companies are free to own and control the means of production and participate in the market, but the government also regulates and intervenes in the economy to ensure that it operates in the best interests of society as a whole. The government may provide public goods and services, such as education and healthcare, and may also regulate businesses to ensure fair competition and prevent monopolies. In addition, the government may provide social safety nets, such as welfare programs and unemployment benefits, to protect individuals from the risks of the market. In a mixed economy, the balance between government intervention and private enterprise can vary depending on the specific needs and goals of the society. The aim of a mixed economy is to combine the efficiency of market-driven capitalist systems with the social welfare and stability of planned economies. In summary, a mixed economy combines the characteristics of both planned and capitalist economies. It allows for private ownership and control of production and distribution, while also allowing for government intervention to ensure social welfare and stability.

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The amount of satisfaction obtained from the consumption of a commodity at a particular time is called total utility. Total utility refers to the total amount of satisfaction or pleasure that a consumer derives from the consumption of a certain amount of a commodity. For example, if a person drinks two cups of coffee, the total utility they derive from the coffee is the combined satisfaction they get from both cups. Marginal utility, on the other hand, refers to the additional satisfaction that a consumer gets from consuming one more unit of a commodity. Diminishing returns occurs when the marginal utility of a commodity starts to decrease as the consumer consumes more of it. Average utility is the total utility divided by the quantity consumed, and it represents the average level of satisfaction per unit of the commodity consumed. However, total utility is the overall level of satisfaction derived from the consumption of a particular quantity of a commodity.

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The equilibrium level of output of a monopolist is determined at a point where marginal revenue equals marginal cost. A monopolist is a single seller in a market with no close substitutes for its product, which gives the monopolist market power to control the price of the product. The monopolist's goal is to maximize its profit by producing the level of output that generates the highest profit. To determine this level of output, the monopolist must take into account the relationship between the marginal revenue it receives from selling an additional unit of output and the marginal cost of producing that unit. Marginal revenue is the additional revenue generated by selling one more unit of output, while marginal cost is the additional cost of producing one more unit of output. The monopolist will continue to produce more output as long as the marginal revenue from selling an additional unit of output is greater than the marginal cost of producing that unit. The monopolist will stop producing more output when the marginal revenue from selling an additional unit of output is equal to the marginal cost of producing that unit. At this point, the monopolist has reached the equilibrium level of output, where it is maximizing its profit. In summary, the equilibrium level of output of a monopolist is determined at a point where marginal revenue equals marginal cost. This is the level of output where the monopolist is maximizing its profit.

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The full meaning of OPEC is the "Organization of Petroleum Exporting Countries". OPEC is a group of 13 countries that cooperate and coordinate their petroleum production policies to stabilize oil markets, ensure a regular supply of petroleum to consumers, and secure a fair return on their petroleum exports. The organization was founded in 1960 and is headquartered in Vienna, Austria. OPEC member countries control a significant portion of the world's oil reserves and production, making them a powerful force in the global energy market.

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The market price of a commodity is normally determined by the interaction of the force of demand and supply. This means that the price of a commodity is determined by how much of it is available in the market (supply) and how much people want to buy it (demand). If the supply of a commodity is high and the demand is low, the price will be low. On the other hand, if the demand for a commodity is high and the supply is low, the price will be high. The law of demand and other factors can also influence the price, but the interaction of supply and demand is the primary factor that determines the market price of a commodity.

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One of the factors affecting the geographical distribution of population is the climate conditions of the different parts of the country. The climate of a region can influence where people choose to live, as some areas may have more favorable conditions than others. For example, areas with moderate temperatures, abundant rainfall, and fertile land are often more attractive to people than areas with extreme temperatures, arid conditions, or poor soil quality. People tend to migrate to areas where the climate is favorable for their preferred lifestyle, such as farming, fishing, or urban living. Thus, climate conditions play an important role in determining the distribution of population in a country. However, other factors such as economic opportunities, social and political conditions, and cultural preferences also play a role in determining the distribution of population.

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An invisible term refers to a service or product that cannot be seen or touched physically. Among the options provided, "banking services" is an invisible term because it refers to the various services provided by banks such as loans, deposits, and credit facilities, among others. These services cannot be seen or touched as they are intangible. On the other hand, "petroleum products," "processed rice," and "processed milk" are all visible and tangible products that can be seen and touched physically.

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Increasing the supply of money by the government to meet its own expenditure plans is likely to be inflationary. This means that the value of money will decrease and the prices of goods and services will increase. This happens because there is more money in circulation and therefore there is more demand for goods and services. As a result, sellers can increase their prices to match the increased demand. This can lead to higher inflation rates, making it more expensive for people to buy goods and services.

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The objective of economic integration is the free movement of persons, goods, and services. This means removing trade barriers such as tariffs and quotas to facilitate the movement of goods and services across national borders without restrictions. This allows countries to specialize in producing goods and services that they are good at and import goods and services that they need from other countries, leading to a more efficient allocation of resources and increased economic growth. Additionally, the free movement of persons creates more opportunities for employment, education, and investment, leading to increased economic activity and development. Harmonization of cultural practices is not an objective of economic integration, and the payment of high tariffs and dumping of goods in less developed countries are barriers to economic integration.

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A movement along the same demand curve either upwards or downwards as a result of a change in price implies a change in quantity demanded. This means that the quantity of the good or service demanded by consumers has changed in response to a change in price, but all other factors, such as consumer income and preferences, have remained constant. As the price of a good or service increases, the quantity demanded generally decreases, and vice versa. This relationship between price and quantity demanded is known as the law of demand. It is important to note that a change in demand, which would result in a shift of the demand curve to the left or right, is caused by factors other than the price of the good or service, such as changes in consumer income or preferences.

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The buying and selling of shares is a function performed mostly by "stock exchanges." A stock exchange is a marketplace where shares of publicly-traded companies are bought and sold by investors. When a company wants to raise money, it can issue shares of stock to the public. Investors can then buy these shares, which represent a portion of ownership in the company. Shares can be bought and sold on the stock exchange by individual investors, institutional investors, and other market participants. The stock exchange provides a platform for buyers and sellers to meet and exchange shares, and it facilitates the process of price discovery, where the market determines the price at which shares will be bought and sold. The stock exchange also provides transparency, as investors can see the current price of a company's shares and the volume of shares traded, among other information. Overall, stock exchanges play a critical role in the functioning of modern financial markets, as they provide liquidity, transparency, and a platform for companies to raise capital.

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The motive for holding money for investing in securities is known as speculative motive. It refers to the desire to earn a profit by purchasing securities that are expected to increase in value over time. Investors who hold money for this purpose are willing to take on risk in the hopes of achieving a higher return on their investment. This motive is different from the transactional motive, which involves holding money to meet immediate spending needs, and the accumulation motive, which involves holding money for future expected expenses. The deflationary motive is also different, as it involves holding money to take advantage of falling prices in the economy.

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The agricultural system that is mainly for the cultivation of food crops for family consumption is subsistence farming. Subsistence farming is a type of farming where farmers produce crops and livestock to meet the needs of their family and themselves. The farmers in this system rely on traditional farming techniques and use simple tools and equipment to cultivate their crops. The harvested crops are primarily consumed by the family, and any excess can be sold in the local market. Subsistence farming is usually practiced in rural areas and is characterized by small-scale farming. The farmers in this system usually grow a variety of crops such as maize, beans, cassava, and potatoes, which are suited to the local soil and climate conditions. The farmers also raise livestock such as cows, goats, and chickens for food, and use animal manure as a natural fertilizer for their crops. In summary, subsistence farming is a traditional agricultural system that is mainly for the cultivation of food crops for family consumption. It is characterized by small-scale farming, the use of simple tools and equipment, and reliance on traditional farming techniques.

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Most of the problems of economics arise as a result of "competing demand for scarce resources". Scarce resources are resources that are limited in quantity and cannot be easily replaced or replenished, such as land, labor, and capital. In an economy, there are many different groups, such as individuals, businesses, and governments, all competing for access to these scarce resources in order to produce goods and services. This creates a problem because there is only a limited amount of resources available, which means that some groups will inevitably have to go without. For example, if there is a limited amount of land available for farming, farmers and other groups, such as real estate developers, will have to compete for access to that land. The more demand there is for the land, the higher the price will be, which can make it difficult or impossible for some groups to access it. This problem of competing demand for scarce resources is at the heart of many economic issues, such as inflation, income inequality, and unemployment. Economists study these problems in order to understand how they arise and how they can be addressed through policies and other interventions.

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An increase in the quantity of goods and services produced in a country that raises its national income is known as economic growth. This means that the country is producing more goods and services than before, which leads to an increase in its overall income or Gross Domestic Product (GDP). Economic growth is an important goal for countries because it allows them to improve their standard of living, create more job opportunities, and invest in social services such as education and healthcare. It is different from economic development, which refers to a broader concept that includes improvements in the quality of life and social welfare of the people, in addition to economic growth.

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A cheque book is typically issued to customers who have a current account with a bank. A current account is a type of bank account that allows customers to deposit and withdraw money frequently, and also provides various other banking services such as cheque payments, standing orders, and direct debits. While some banks may issue cheque books to customers with other types of accounts, such as savings accounts or fixed deposit accounts, this is less common. Savings accounts and fixed deposit accounts are generally used for saving money, and have restrictions on the number of withdrawals and transactions that can be made. Time deposit accounts, also known as term deposits, are a type of fixed deposit account with a specific term or maturity period, during which the funds cannot be withdrawn without penalty. Therefore, if you need a cheque book, it is advisable to open a current account with a bank, as this is the most common type of account that comes with a cheque book facility.

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When the quantity of a commodity supplied increases and the quantity demanded decreases, there will be a fall in price. This is due to the law of supply and demand, which states that the price of a good is determined by the intersection of the supply and demand curves. When there is an increase in supply and a decrease in demand, the market becomes more saturated with the commodity, and there is a surplus of goods available. In order to sell off this surplus, producers will lower their prices in order to entice consumers to buy. As a result, the price of the commodity will fall until it reaches a new equilibrium point where the quantity supplied and quantity demanded are equal.

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The reward to capital as a factor of production is "interest." Capital refers to the machinery, equipment, and other assets used in the production process. Interest is the return that the owners of capital receive for allowing others to use their assets. Interest is often calculated as a percentage of the amount of capital invested, and it is paid to the owners of the capital as compensation for the risk they take on by investing in a particular project or enterprise. The interest rate reflects the opportunity cost of investing in one project over another, and it is influenced by factors such as inflation, government policies, and the overall level of economic activity. Overall, interest is an important source of income for those who own capital, and it plays a critical role in encouraging investment and economic growth.

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The study of economics is concerned with understanding how individuals, businesses, and governments make decisions about how to allocate scarce resources in order to satisfy unlimited wants and needs. By studying economics, individuals can gain a better understanding of how markets work and how various economic factors, such as prices, wages, and interest rates, are determined. This understanding can help individuals make rational decisions about how to use their own resources, such as their time and money. It can also help them understand the impacts of various economic policies and decisions, such as taxes and regulations, on their own lives and on society as a whole. While the study of economics can certainly be useful for individuals looking to accumulate wealth or change jobs, it is not a guarantee of either of these outcomes. Similarly, it is not an endorsement of evading taxes, as taxes are an important part of how governments fund public goods and services that benefit society as a whole.

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The legal tender in West Africa is currency. Legal tender is a form of payment that a creditor is required by law to accept as payment for a debt. In West Africa, the official currency used in most countries is the West African CFA franc. It is used in countries such as Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, and Togo. The use of other forms of payment such as treasury bills, shares, or credit cards is not mandated by law and is subject to agreement between the parties involved.

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The burden of a tax finally rests on the incidence of taxation. This refers to the ultimate economic impact of a tax, which can either be borne by the person or entity that is legally responsible for paying the tax (the tax object), or it can be passed on to someone else in the form of higher prices or reduced profits (the tax incidence). For example, if a government imposes a tax on cigarettes, the legal responsibility for paying the tax falls on the cigarette manufacturers or importers (the tax object). However, the ultimate burden of the tax may be passed on to the consumers in the form of higher prices for cigarettes, which means that the incidence of the tax falls on the consumers. The incidence of taxation is an important concept because it helps us understand who is actually bearing the economic burden of a tax. It can also help policymakers design tax policies that are more equitable and efficient.

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The distribution of goods and services can be hindered by too many middlemen. Middlemen are individuals or businesses that facilitate the exchange of goods and services between the producers and consumers. While middlemen can provide valuable services such as transportation, storage, and market information, having too many middlemen can lead to inefficiencies in the distribution process. For example, each middleman adds a markup to the price of the goods or services they handle, which can increase the final price for the consumer. Additionally, each middleman also adds a layer of complexity to the distribution process, which can result in delays and miscommunication. Moreover, having too many middlemen can also make it difficult for producers to get their products to market efficiently, as they may have to deal with multiple intermediaries, each with their own requirements and procedures. This can result in added costs and time delays, which can ultimately hinder the distribution of goods and services.

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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.