If marginal revenue becomes negative, this must mean that the firm's total revenue is declining with additional output.

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated from producing one more unit of output. If marginal revenue becomes negative, it means that the revenue from selling the additional unit is less than the revenue from selling the previous unit. This implies that the firm's total revenue is declining with additional output, which is possible in some situations, such as when the market is saturated or the demand for the product is declining.

If Marginal Revenue Becomes Negative, This Must Mean That the Firm's