For which firm can marginal revenue become negative
A)competitive firms, since price is equal to marginal revenue
B)competitive firms, since they are facing downward-sloping demand curves
C)monopoly firms, since they are facing a downward-sloping demand curves
D)monopoly firms, since price is equal to marginal revenue

Question

Quizplus · Accepted Answer

A monopoly firm's demand curve is downward sloping, meaning that as they increase their production, their marginal revenue will eventually become negative. In a competitive market, however, price is equal to marginal revenue, therefore it cannot become negative.

For Which Firm Can Marginal Revenue Become Negative