Question:medium

The shape of average revenue curve in monopoly is

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AR = Price for any firm; a monopolist's price-quantity (demand) relation is downward sloping.
Updated On: Sep 23, 2026
  • Upward rising
  • U-shaped
  • Downward sloping
  • S-shaped
Show Solution

The Correct Option is C

Solution and Explanation

Step 1: Start from the definition of AR:
$AR = \dfrac{TR}{Q} = \dfrac{P \times Q}{Q} = P$, so the AR curve is literally the same line as the price the monopolist charges at each quantity.

Step 2: Recall the monopolist's demand curve:
Because a monopolist is the only seller, the market demand curve IS the firm's demand curve, and by the law of demand it slopes downward.

Step 3: Combine the two facts:
Since AR = P and the firm's own demand curve (P against Q) is downward sloping, AR must also be downward sloping.

Final Answer:
Option C, downward sloping.
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