Multiple Choice - Select best answer For a demand curve that is downward sloping

Question

Multiple Choice - Select best answer

For a demand curve that is downward sloping, the marginal revenue curve
a. will be the same as the demand curve.
b. will be to the left of the demand curve and half as steep.
c. will be to the right of the demand curve and twice as steep.
d. will be to the left of the demand curve and twice as steep.

For a demand curve that is horizontal, the marginal revenue curve
a. will be to the right of the demand curve and half as steep.
b. will be to the right of the demand curve and twice as steep.
c. will be to the left of the demand curve and half as steep.
d. will be the same as the demand curve

Explanation / Answer

1) d. If the demand curve has a slope of -x (negative since it is downward sloping) then the marginal revenue line will have a slope of -2x so that the MR line crosses the x-axis when AC=MC=D (the equilibrium pt) 2) d. Here MR=AV=D so the graph of marginal revenue and demand are the same. If this helps, please rate.

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