The reason why firm with market power will have a marginal revenue curve that is always below its demand curve is because of the output effect and the discount effect.
What is the output and discount effect?
These effects refer to the tendency of firms with market power, to offer lower prices on their goods and services to be able to sell more units of their products.
For this reason, the marginal revenue - additional revenue received - will be less than price - demand curve because the price will always drop to sell more units.
Find out more on the marginal revenue curve of firms with market power at https://brainly.com/question/7451501.
