Given a downward-sloping linear demand curve, if total revenue decreases as quantity rises, marginal revenue must be
A) positive and demand is elastic.
B) negative and demand is elastic.
C) positive and demand is inelastic.
D) negative and demand is inelastic.

Question

Quizplus · Accepted Answer

When total revenue decreases as quantity rises, it indicates that the demand is inelastic. In this case, marginal revenue is negative because the additional units sold bring in less revenue than the loss from the price drop on all units sold.

Given a Downward-Sloping Linear Demand Curve, If Total Revenue Decreases