Micro Unit 4, Question 1- Monopoly Demand and MR

The video tutorial explains the relationship between demand and marginal revenue in both perfect competition and monopoly markets. In perfect competition, firms are price takers, and the price equals marginal revenue. However, in a monopoly, the firm is a price maker, and the relationship between demand and marginal revenue differs. The video illustrates how monopolies cannot price discriminate and must lower prices to sell additional units, resulting in marginal revenue being less than the price. This concept is crucial for understanding monopolies, monopolistic competition, and oligopolies.

What is the relationship between demand and marginal revenue in a perfectly competitive market?

How does a monopoly differ from a perfectly competitive firm in terms of pricing?

Explain the concept of price discrimination in the context of monopolies.

What happens to marginal revenue when a monopoly lowers the price to sell additional units?

Describe the implications of being a price maker for monopolies and oligopolies.