Question

The shape of average revenue curve in monopoly is

• A. Upward rising
• B. U-shaped
• C. Downward sloping
• D. S-shaped

Hint:

AR = Price for any firm; a monopolist's price-quantity (demand) relation is downward sloping.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
Under monopoly there is a single seller, and Average Revenue (AR) always equals price (AR = TR/Q = P).

Step 2: Why option C is correct:
A monopolist faces the entire (downward-sloping) market demand curve, since AR = Price, the AR curve is identical to this downward-sloping demand curve — to sell more units the monopolist must lower the price.

Step 3: Why option A is wrong:
An upward-rising AR would mean price rises as quantity sold rises, which contradicts the law of demand faced by a monopolist.

Step 4: Why option B is wrong:
U-shaped curves are typical of short-run average cost curves, not the AR/demand curve of a monopolist.

Step 5: Why option D is wrong:
An S-shape describes curves like the Total Product curve under diminishing marginal returns, not AR.

Final Answer:
The monopolist's AR curve is downward sloping.