The above diagram implies that whenever a firm's demand curve is downsloping:

Question

Quizplus · Accepted Answer

Whenever a firm's demand curve is downsloping, the marginal revenue curve will lie below the demand curve. This is because the firm must lower the price on all units sold to sell additional units, resulting in a decrease in revenue per unit. Therefore, option D is correct as marginal revenue is less than price in such a scenario. Option A is incorrect as price discrimination may still be possible, depending on the specific circumstances. Option B is incorrect as efficiency depends on a variety of factors, not just the shape of the demand curve. Option C is incorrect as the demand and marginal revenue curves will not coincide in a downsloping demand curve scenario.

The Above Diagram Implies That Whenever a Firm's Demand Curve