Advertisements
Advertisements
Question
Under imperfect competition, what happens to MR when TR is positive?
Options
Decreases
Increases
remains constant
May increase or decrease
MCQ
Advertisements
Solution
Decreases
Explanation:
Because the demand curve slopes downward in an imperfectly competitive market, a firm must lower its price in order to sell more units. Therefore:
- It's still possible for Total Revenue (TR) to be positive.
- However, for every extra unit sold, the Marginal Revenue (MR) falls.
- While TR stays positive, MR may even go to zero or negative.
shaalaa.com
Is there an error in this question or solution?
