Why is MR less than AR under monopoly or monopolistic competition. Give any two reasons.

Dear Students,

MR curve is less than AR curve under monopoly or monopolistic competition because of following reasons : 
  1. In Monopoly and monopolistic competition Price is equal to AR. And also, Demand curve of these competition are downward sloping which means that they have to lower the price to sell an extra unit of goods. it decreases the Marginal Revenue of the unit of goods sold than the price ( AR curve) of the goods.
  2. MR Curve is limited to one unit only ( It is calculated by the one unit ) whereas AR is derived by all units. so, AR shows comparatively lesser fall than fall in MR.

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