Question

What happens to marginal revenue when total revenue is maximum?

Answer 1

When total revenue is maximum, the marginal revenue becomes zero.

Marginal revenue (MR) is the additional revenue from selling one more unit of output.

• When TR reaches its maximum point, there is no further increase in revenue with additional sales.
• Therefore, MR = 0 at that point.

This is the turning point on the Total Revenue curve. Beyond this, if output increases, MR becomes negative and TR starts falling.