Refer to the information provided in Table 13.1 below to answer the question(s) that follow.
Table 13.1
$$\begin{array} { | c | c | }
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 2,000 \
\hline 3.50 & 2,400 \
\hline 3.00 & 2,800 \
\hline 2.50 & 3,200 \
\hline 2.00 & 3,600 \
\hline 1.50 & 4,000 \
\hline 1.00 & 4,400 \
\hline
\end{array}$$
-Refer to Table 13.1. If a monopoly faces the demand schedule given in the table, its marginal revenue is positive
A) at all prices above $3.00.
B) at all prices.
C) at all prices below $3.00.
D) at all price but $3.00.

Question

Refer to the information provided in Table 13.1 below to answer the question(s) that follow.
Table 13.1
 $$\begin{array} { | c | c | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 4.00 & 2,000 \
\hline 3.50 & 2,400 \
\hline 3.00 & 2,800 \
\hline 2.50 & 3,200 \
\hline 2.00 & 3,600 \
\hline 1.50 & 4,000 \
\hline 1.00 & 4,400 \
\hline
\end{array}$$
-Refer to Table 13.1. If a monopoly faces the demand schedule given in the table, its marginal revenue is positive
A) at all prices above $3.00.
B) at all prices.
C) at all prices below $3.00.
D) at all price but $3.00.

Quizplus · Accepted Answer

Marginal revenue is positive when the additional revenue from selling one more unit is greater than the revenue lost from lowering the price on all units sold. In a downward-sloping demand curve, this occurs until the price elasticity of demand becomes unitary. Without calculating exact quantities, the general principle is that at higher prices (above $3.00 in this context), the reduction in quantity demanded is less severe, allowing for positive marginal revenue. As prices decrease and we move down the demand curve, the quantity increase does not compensate for the lower price per unit, eventually leading to negative marginal revenue.

Refer to the Information Provided in Table 13 -Refer to Table 13