If a ﬁrm's marginal revenue is less than price at all levels of output, this means that _____.
A) it must lower its price to sell an additional unit of output
B) it is a price taker in the market
C) there are no barriers to entry and exit in the market
D) there are a large number of buyers and sellers in the market

Question

Quizplus · Accepted Answer

When a firm's marginal revenue is less than its price at all levels of output, it indicates that the firm must lower its price to sell an additional unit of output. This is characteristic of firms operating under monopolistic competition or monopoly, where they have some control over the price and face a downward-sloping demand curve.

If a ﬁRm's Marginal Revenue Is Less Than Price at All