In a monopoly market, how does the marginal revenue curve relate to the demand curve?

Show Answers

It coincides exactly with the demand curveIt runs parallel to the demand curveIt is positioned below and approaches the demand curveIt lies beneath and moves away from the demand curve

Explanation

In a monopolistic market, the marginal revenue curve always lies below the demand curve and diverges from it because the monopolist must lower the price to sell additional units, causing marginal revenue to decrease faster than price.