ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -This is also known as the additional revenue “at the margin.” Therefore, profit is maximized when marginal cost equals marginal revenue which is the same as saying when marginal profit equals zero.

Detailed explanation-2: -Only when marginal revenue is zero will total revenue have been maximised. Stopping short of this quantity means that an opportunity for more revenue has been lost, whereas increasing sales beyond this quantity means that MR becomes negative and TR falls.

Detailed explanation-3: -Total revenue is maximized when marginal revenue is zero; hence total revenue will only decrease when marginal revenue becomes zero. Therefore, the elasticity of demand in this regard shows that the percentage decrease in price is greater than the percentage increase in quantity demanded.

Detailed explanation-4: -Total revenue is maximised when marginal revenue = zero. This is the output at the mid-point of a linear demand curve and also where the price elasticity of demand = one. Total revenue = price per unit multiplied by quantity sold.

Detailed explanation-5: -Revenue maximization is the theory that if you sell your wares at a low enough price, you will increase the revenue you bring in by selling a higher total volume of goods.