If a firm has market power,the marginal revenue curve always lies below the demand curve.

Question

Quizplus · Accepted Answer

This is because the firm with market power has some control over the price it sets, which means that in order to sell additional units of output, it must lower the price for all units sold. As a result, the marginal revenue generated from each successive unit sold is lower than the price at which it is sold, causing the marginal revenue curve to be below the demand curve.

If a Firm Has Market Power,the Marginal Revenue Curve Always