If the demand curve for a firm is downward-sloping, its marginal revenue curve
A)will lie above the demand curve.
B)will lie below the demand curve.
C)is the same as the demand curve.
D)is horizontal.

Question

Quizplus · Accepted Answer

The marginal revenue curve for a firm that faces a downward-sloping demand curve will lie below the demand curve. This is because in order to sell more units, the firm must lower the price of each unit, which means that the revenue gained from selling an additional unit will be less than the revenue gained from the previous unit. This results in a marginal revenue curve that is flatter and lies below the demand curve.

If the Demand Curve for a Firm Is Downward-Sloping, Its