For every firm that faces a downward-sloping demand curve for its output,
A)marginal cost exceeds marginal revenue at all output levels
B)marginal revenue equals the price of the last unit sold
C)marginal revenue is less than the price of the last unit sold
D)marginal revenue exceeds the price of the last unit sold
E)marginal cost exceeds the price of the last unit sold

Question

Quizplus · Accepted Answer

For a firm with a downward-sloping demand curve, it must lower the price on all units sold to sell more. This means that marginal revenue (the revenue generated by selling one more unit) will be less than the price of the last unit sold since the firm had to lower the price of all units sold to sell that last unit. Marginal cost, on the other hand, is the additional cost of producing one more unit, and it may or may not exceed the price of the last unit sold depending on the specific cost structure of the firm.

For Every Firm That Faces a Downward-Sloping Demand Curve for Its