When marginal revenue is negative, demand is
A)elastic.
B)inelastic.
C)unit elastic.
D)there is not sufficient information to classify the elasticity of demand.

Question

Quizplus · Accepted Answer

When marginal revenue is negative, it means that the total revenue decreases as the firm produces more units of output. This generally occurs in the inelastic demand curve region, where increasing the price leads to a decrease in the quantity demanded. Therefore, the best choice is B, inelastic demand.

When Marginal Revenue Is Negative, Demand Is