When the demand curve for the product of an individual seller is downward sloping, the seller's marginal revenue curve for that product is:
A) identical to the demand curve.
B) horizontal and located at the equilibrium market price.
C) indeterminate because price changes all along the demand curve.
D) downward sloping and lies below, or to the left of, the demand curve.

Question

Quizplus · Accepted Answer

When the demand curve is downward sloping, the marginal revenue curve is also downward sloping but lies below the demand curve. This is because, to sell additional units, the seller must lower the price, which reduces the revenue gained from selling additional units compared to the revenue if prices remained constant.

When the Demand Curve for the Product of an Individual