The marginal revenue curve is below the demand curve
A)If a firm must lower its price to sell additional output.
B)For a competitive firm.
C)When a market is characterized by economies of scale.
D)For all firms.

Question

Quizplus · Accepted Answer

The marginal revenue curve is below the demand curve for a firm that must lower its price to sell additional output, which is characteristic of firms in imperfectly competitive markets (e.g., monopolistic competition, oligopoly, and monopoly). In such markets, to increase sales, a firm must reduce its price, which causes the marginal revenue to be less than the price (demand).

The Marginal Revenue Curve Is Below the Demand Curve