If marginal revenue for a firm is negative,
A)marginal cost must also be negative
B)total revenue will decrease if the firm sells more output
C)total revenue must also be negative
D)the firm should shut down in the short run
E)the lost revenue from having to lower its price is less than the additional revenue from higher sales

Question

Quizplus · Accepted Answer

If the marginal revenue for a firm is negative, it means that the revenue earned from selling one more unit is less than the cost of producing that unit. Therefore, if the firm sells more output, its total revenue will decrease. This is because the lost revenue from having to lower its price is greater than the additional revenue from higher sales. However, this does not necessarily mean that the firm should shut down in the short run, as this decision depends on the firm's fixed costs and other factors.

If Marginal Revenue for a Firm Is Negative