Q:

Why is the marginal revenue curve less than the demand curve for all imperfectly competitive firms?

A:

Quick Answer

The marginal revenue curve is always below that of the demand curve in imperfectly competitive firms because the marginal revenue from the sale of additional unit is less than its price. Because the marginal revenue is less than the price, it remains below the average revenue or demand curve, notes Economic Concepts .

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Full Answer

Under perfect competition, the marginal revenue curve and the demand curve are both affected by the same factors: changes in income, substitution units and population. These factors determine the fluctuation of the curve, according to Wikipedia's definition. In an imperfectly competitive situation, the determining factor is solely based upon the supplier of the product. The lower the unit sale price, the higher the sales.

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