GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A firm’s marginal revenue
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is always positive
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is always negative
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can be positive
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is positive at point at which the total revenue is maximum
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Explanation:
Detailed explanation-1: -When marginal revenue is positive, total revenue increases with increase in output. 2. When marginal revenue is zero, total revenue is maximum.
Detailed explanation-2: -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.
Detailed explanation-3: -A key characteristic of a monopolist firm is that it’s a profit maximizer. A monopolistic market has no competition, meaning the monopolist controls the price and quantity demanded. The level of output that maximizes a monopoly’s profit is when the marginal cost equals the marginal revenue.
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