Question

What changes should take place in total revenue so that marginal revenue is positive and constant?

Answer 1

For marginal revenue (MR) to remain positive and constant, total revenue (TR) must increase at a constant rate with each additional unit of output sold. This situation happens under perfect competition, where the price remains the same regardless of the quantity sold. As shown in the image, TR increases in equal steps (e.g., by ₹15 each time), forming a straight upward-sloping line through the origin. This means the firm is earning the same additional revenue for every extra unit sold, keeping MR constant and positive.

Price (₹) P	Units of output Q	TR (₹) P × Q	AR (₹) TR ÷ Q	MR (₹) TRn − TRn−1
(1)	(2)	(3)	(4)	(5)
15	1	15	15	15
15	2	30	15	15
15	3	45	15	15
15	4	60	15	15
15	5	75	15	15