Step 1: Draw Marginal Revenue (MR) curve below the Demand (DD) curve
A monopolist is a price setter as he does not face competitors. Thus demand for oil is relatively price inelastic (demand for oil itself is also price inelastic)
From the demand curve, if the monopolist lower prices, quantity demanded will increase.
Thus the marginal revenue the monopolist earns, or the revenue generated from each additional unit of good from each additional unit of output, will decrease.
Hence MR curve is below DD curve.
From the demand curve, if the monopolist lower prices, quantity demanded will increase.
Thus the marginal revenue the monopolist earns, or the revenue generated from each additional unit of good from each additional unit of output, will decrease.
Hence MR curve is below DD curve.