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 Monopoly and its demand curve

Since the monopoly is the only supplier of the product of the industry, the demand curve for the product of a monopolistic firm is the market demand curve for the product of the industry.

The downward-sloping demand curve is also the average revenue curve AR (more).

Because the market demand curve slopes downward, the monoploy can only sell an additional quantity of output if it lowers the price of its output.  

The lower price will usually apply to all units of output, which means that the marginal revenue from the sale of an extra unit of output  is less than the price at which all units of the product are sold.  The marginal revenue curve MR is therefore also downward-sloping and lies halfway between the AR curve and the price axis (more).

If a monopolistic firm wishes to increase it sales, it must decrease the price of the product.
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