when AR is falling why MR falls at a faster rate than AR?
Dear student,
Under imperfect competition in order to sell more the firm must lower the price. This suggests that both AR and MR curves are downward sloping. Mathematically, it is only when the MR falls at a faster rate that the AR would fall.
Under imperfect competition in order to sell more the firm must lower the price. This suggests that both AR and MR curves are downward sloping. Mathematically, it is only when the MR falls at a faster rate that the AR would fall.