ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lowers the industry’s marginal efficiency scale
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raises price of complementary goods
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shifts the demand curve to the left
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leads to a fall in total revenue
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Detailed explanation-1: -What Does It Mean If Marginal Revenue Is Negative? If marginal revenue is negative, this means total revenue falls as additional units are sold. This may be the result of a company needing to cut prices to sell those additional units.
Detailed explanation-2: -When marginal revenue becomes negative, total revenue falls with increase in output.
Detailed explanation-3: -When a firm faces a downward-sloping demand curve, then marginal revenue will be less than average revenue and can even be negative. This is because, if a firm cuts price, it gets a lower average price but also loses revenue it could otherwise have made from selling units at a higher price.
Detailed explanation-4: -When demand is inelastic, marginal revenue is negative. Recall that marginal revenue is the increase in revenue when the firm sells an additional unit of output. When demand is inelastic, selling an extra unit of output is associated with a price reduction.